UBA to raise capital through the sale of 10.8 billion shares

If you are reading this from our website, you should join others who have subscribed to get quality tech updates in your box.

United Bank for Africa (UBA), a leading Nigerian bank valued at over ₦1 trillion, is preparing to raise fresh capital. This move comes in response to the Central Bank of Nigeria's (CBN) recent increase in minimum capital requirements for banks.

UBA plans to sell 10.8 billion new ordinary shares. Existing investors will be given priority during this share sale. While a nominal value of ₦0.50 kobo per share has been assigned, the final selling price will be disclosed at the bank's annual general meeting scheduled for May 24, 2024. Analysts predict UBA may need to offer the shares at a discount compared to the current market price to attract buyers.

Beyond the share sale, UBA will explore raising additional capital through various instruments. These may include preference shares, convertible or non-convertible notes, and bonds.

Despite the capital raise, UBA has shown positive growth. In a corporate disclosure on Monday, the bank reported a 5% year-to-date increase in total assets, reaching N974.47 billion in March 2024 compared to N931.95 billion in December 2023. This growth was accompanied by a significant 121% increase in cash and cash equivalents during the same period.

This capital raise by UBA echoes a similar directive by the Central Bank of Nigeria (CBN) in 2004, which raised the minimum capital base from N2 billion to N25 billion. That policy resulted in mergers and acquisitions within the banking sector, reducing the number of banks from 89 to 25.

If you are reading this from our website, you should join others who have subscribed to get quality tech updates in your box.