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127 Year Old First Bank’s Wish To Renew Self As A New Generation Bank Met, With Otedola’s Purchase Of Majority Shares

The Oasis Reporters

October 23, 2021

Launched in 1894 as Standard Bank, FirstBank has established itself as a brand of strength and dynamism with a vision to be the leading international banking group. By May 29, 1999 when Nigeria’s third democratic experiment commenced, graduates of First Bank’s Managing Directorship have taken pride of place in being promoted to be governors of Nigeria’s Central Bank.

Chief (Dr.) Joseph Oladele Sanusi, CON served from 29/5/1999 to 29/5/2004 and he came from First Bank to head the CBN. The next CBN governor after Prof. Chukwuma C. Soludo’s tenure (from: 29/5/2004 to 28/5/2009) was Mallam Sanusi Lamido Sanusi, who equally came from First Bank PLC. He served from 4/6/2009 to 2/6/2014 before
Mr. Godwin Emefiele broke the convention by emerging from Zenith Bank PLC, a new generation bank that has today become Nigeria’s most profitable bank, crossing the 200 billion naira mark in Profit After Tax (PAT), the first ever in Nigeria’s financial history about two years ago.

Looks like since then, First Bank Nigeria PLC has consciously wanted to reinvent itself by being new generation in it’s 127 year old history. Therefore investment savvy billionaire, Femi Otedola who Forbes Africa Magazine touted as The Billionaire Who Bounced Back in it’s November 2014 issue, has taken over majority shareholding of FBNH.

An entity owned by the billionaire investor has been behind a massive mop-up of the shares of FBN Holding, one of Nigeria’s Tier- 1 banks.

According to several sources with knowledge of the purchase, majority ownership of FBN Holding Company, owners of Nigeria’s oldest bank, First Bank, is about to be upturned following months of slow and meticulous purchase of the company shares on the floor of the Nigerian Stock Exchange by Otedola, thus making Femi Otedola the majority shareholder of the bank.

The billionaire investor has a huge hallo round his hat for turning around African Petroleum after taking it over by turning it into a dominant player in the downstream space of the oil and gas sector.

For months, Femi Otedola has been mopping up shares of the bank, gradually accumulating his ownership and surpassing shares owned by any other single shareholder of the bank through a vehicle, Calvados Global Services Ltd. It is speculated that other special purpose vehicles had been deployed for the same purpose.

The billionaire businessman made his move, Friday, October 22, 2021, thus becoming First Bank of Nigeria Plc’s single largest shareholder by his acquisition of about N30 billion worth of shares.

What this indicates is that Otedola being the largest shareholder, means he holds the highest voting shares and can dictate the direction of the bank through his voting power.

This move became easy because FBNH had 34.7 billion of its shares floating freely meaning it is held by diverse shareholders. It made the shares easy to acquire on the stock exchange.

The latest audited account of FBN Holdings does not have any shareholder with up to 5% of the ownership of the banking power house. Femi Otedola now owns over 5% of the bank, setting himself up to be the single largest shareholder of the bank. He did this quietly and progressively over the course of the last 6 months when the share price traded at just above N7. However, rumours of an imminent takeover started to make the rounds among traders pushing up the share price of the bank to breach the N8 ceiling by the end of September. While the rumours gained ground, no one actually knew specifically who the mystery buyer was, making off-market block purchases ranging within hundreds of millions of units at a time.

But by October, FBNH share price had risen as high as N12 per share gaining 69% in two weeks.

Financial Intelligence sources say Otedola might have about 10 percent worth of the bank already.
The stock turned bullish when speculations rose that Femi Otedola was behind the purchases. This made investors upbeat, when the résumé of the new kid on the block was looked into.

The stock turned bullish when it became clear Mr Otedola might be behind some of the major purchases, seen as a positive sign

One of the successes of Femi Otedola that saw the same momentum in share price movement was that of Forte Oil, which remains one of the best-performing stocks in 2013 after it achieved over 1000% share price growth that year.

Otedola got to that junction when he divested his 75% direct and indirect share holding in Forte Oil, via a merger of his company Zenon Oil and former African Petroleum in 2019. That move raised eyebrows. And the billionaire added more lashes to the brows when he announced that he wanted to explore and maximize business opportunities in refining and petrochemicals.

But then, the sights of the billionaire investor were set much higher. All that came into sharp view when he successfully turned around Forte Oil, then sold it to new owners.

When he acquired Geregu Power Plant during the privatization of 2013 with a $1 billion investment, eyes opened wider, and his strategic focus became revealed.
He acquired the then 414-MW Geregu Power Plant under a joint venture partnership with the State Grid Corporation of China/Shanghai Municipal Electric Corporation; the largest utility company in the world by size and market capitalisation.

The plant has since been revamped, transformed, increasing the overall efficiency of the plant through a major overhaul exercise at a cost of USD 100 million dollars. Nameplate capacity increased from 414 to 435 MW and operational capacity increased to 90 percent of the nameplate capacity about 10% of the national grid.

Today Geregu Power Plant is touted as one of the most efficient plants in the country.

Going by Otedola’s pedigree from previously acquired entities, majority ownership of FBNH by an Otedola backed entity will probably usher in a transformation in the bank revving up investor sentiments in anticipation.

Hitherto another south west billionaire, Oba Otudeko used to be the single majority owner of the bank considering the enormous control he wielded over the bank for years.

Industry watchers say his drawn out battle of wits with the Central Bank following the failed removal of current MD/CEO Adesola Adeduntan was a bruising, and this marked a sudden end to his control of the bank providing an opening for Mr Otedola to move in on controlling the bank.

FBNH currently has a total outstanding shareholding of 39.5 billion units and a market capitalization of N423.5 billion (over a billion dollars assuming official exchange rate). According to information contained in the 2020 FY report of the bank, 40 shareholders owned 31.03% of the bank while no individual shareholder held more than 5% of the bank. Shareholders with over 5% ownership of shares of a publicly quoted company are statutorily expected to declare ownership publicly.

The financial statement of the company also states Dr. Oba Otudeko owns 532 million units or 1.3% holding of the company. Oye Hassan Odukale reportedly owns 370 million units of the bank according to the information contained in its 2020 annual reports. The billionaire owner of Globacom, a major telecommunications firm, Mike Adenuga is also a major shareholder of the company but is thought to own far fewer shares than Oba Otudeko and Odukale. It is also likely that they have other shares owned by proxies but not included in the shareholdings disclosed publicly.

In situations of this nature, speculations would be afloat in several directions, but one question remains preeminent and that is, what is fuelling this move by Otedola?

Some say that the largely diversified shareholding structure of First Bank’s holding company, FBNH, makes it rather awkward to have one single individual calling the shots and giving the organization a unique direction as happens in many new generation banks.
All that would soon change. And when a savvy investor like Femi Otedola takes charge, the dance steps get upbeat.

The market is watching.

By Greg Abolo
With Agency reports

Greg Abolo

Blogger at The Oasis Reporters.

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