Union Bank N50bn Rights Issue Opens at N4.10 Per Share

The Rights Issue of 12.1 billion ordinary shares of 50 kobo each being offered by Union Bank of Nigeria Plc to existing shareholders at N4.10 opened yesterday. The shares are being offered on the basis of five new shares for every seven shares held. Considering the closing price of the equity of N6.00, existing shareholders are buying the offer at a discount of N1.90 per share. According to the management of Union Bank, the proceeds of the rights issue will enhance the bank’s capital base and better position it to deliver stronger and sustained shareholder returns.

The bank last kicked off a road show to sensitise shareholders. Speaking on the offer, Chief Executive Officer of Union Bank , Emeka Emuwa, said: “With the commencement of the Rights Issue subscription, we have now officially entered a new phase of our transformation where we will be focused on accelerating business growth to deliver on our objective of becoming one of Nigeria’s leading financial institutions.”

Union Bank announced earlier this month that the Bank had received all necessary regulatory approvals from the Nigerian Stock Exchange (NSE) and Securities and Exchange Commission (SEC) to launch the Rights Issue.

According to Emuwa, the capital raised from the rights issue will support our strategy to accelerate business growth and position Union Bank as a leading commercial bank in Nigeria.”
Chapel Hill Advisory Partners Limited is lead issuing house, while FSDH Merchant Bank Limited and Stanbic IBTC Capital Limited are joint issuing houses.

Already, market operators said the fund would boost Union Bank’s performance and deliver good returns to shareholders going forward. The bank recorded improved results for the half year (H1) ended June 30, 2017. Union Bank recorded gross earnings of N73.7 billion, showing a growth of 23 per cent from N60 billion in the corresponding period of 2016. Interest income was boosted by naira devaluation-fueled foreign currency loan book to hit N58.3 billion, up from N44.3 billion. Customer deposits rose 15 per cent due to growing confidence in the bank to hit N759 billion as at June 30, up from N658 billion as December 31, 2016. Impairment charge fell by 39 per cent from N8.8 billion to N5.4 billion.

Profit before tax stood at N9.5 billion, showing a growth of seven per cent compared with N8.9 billion in 2016, while profit after tax rose by five per cent from N8.8 billion to N9.2 billion.