The Union Bank of Nigeria Plc on Wednesday said the ongoing N50 billion rights issue would position the bank to pay enhanced dividend to all its shareholders.
Emeka Emuwa, the UBN Managing Director, made the assertion at the bank’s “facts behind the offer” at the Nigerian Stock Exchange in Lagos.
The bank is presently raising N49.7 billion through right issues and the issuance of 12.1 billion ordinary shares of 50k each at N4.10 per share.
The rights issue is being offered to the shareholders on the basis of five new ordinary shares for every seven ordinary shares held as at August 21, 2017.
The offer which opened on September 20, would close on October 30, 2017.
Emuwa said that the rights issue would enhance the bank’s capital base to deliver stronger and sustained returns to the shareholders.
He said that the offer would enhance the bank’s regulatory capital requirement, increment in working capital and strategic investments in technology and digitalisation.
The managing director said that the rights issue would enable the bank to take advantage of emerging investment opportunities in the country.
According to him, this offer will improve capital adequacy ratio for the long-term and build a strong buffer for regulatory requirements.
Emuwa said: “The fund will also create additional and grow risk assets in strategic market segments and sectors, thereby enhancing lending capacity.”
He said that the bank was aspiring to be the leading mid-tier bank by 2018 and a top tier bank from 2021.
On the strategic utilisation of the proceeds, Emuwa said that working capital would gulp 80 per cent.
He said that the bank would deploy the working capital to six key growth sectors of the economy in line with the Federal Government’s strategic growth plan.
According to Emuwa, the key sectors are agriculture, manufacturing, solid minerals, services, construction and real estate and oil and gas.
He said that 12 per cent would be invested in technology, innovation and digitalisation and eight per cent in customer touch points.
On the issue of dividend payment, Emuwa said that the bank was going through a regulatory process to eliminate negative retained earnings so as to pay dividend in the nearest future.
He said that the bank, since recapitalisation, had sustained its positive performance trajectory.
Emuwa added that increment in capital would guarantee sustained growth and enhance shareholder returns.
The bank chief executive said that the bank’s share price appreciated by 61 per cent in the last 12 months and 26 per cent year-to-date.
He added that the recent trading performance of the bank on the NSE would be a core benchmark for shareholders considering participation in the right issue.
Emuwa, however, called on the shareholders to accept and take up their rights in order to benefit from the bank’s success story.