Published: November 29, 2012
Nigerian bank plans to broaden shareholder base with GDR listing on London exchange.
Nigeria’s Zenith Bank has started investor meetings in London ahead of listing global depositary receipts (GDRs) on the London Stock Exchange.
The 22-year old bank has been quoted on its domestic market since 2004. Now the management team hopes to heighten its profile with international investors – no new money will be raised when the GDRs are listed later this year, but the goals are to increase international analyst coverage, boost liquidity and broaden the bank’s investor base.
“We’ve found that by only being listed on the Nigerian Stock Exchange, some of you who are interested in buying Zenith Bank shares will have to pass through brokers or nominated companies to access those shares,” CEO Godwin Emefiele said at an investor presentation at the London exchange attended by EMEA Finance.
“There are some who as a result of internal rules aren’t able to [buy our shares] because your institutions insist that the company whose shares you are buying are listed on the LSE.”
The GDR listing will see the bank issue receipts each representing 50 shares. JP Morgan is acting as depositary bank.
Zenith has some 2mn accounts under its management and 366 branches across Nigeria, Sierra Leone, the Gambia and the UK. Emefiele, CFO Udom Emmanuel and their colleagues will hope the bank’s track record attracts international investors eager to buy into one of Africa’s many growth stories.
Profits have risen steadily since 2009 and the bank’s capital adequacy ratio stands at 29.1%, far above the regulatory minimum of 15% for an institution with international operations, although Emefiele tells investors that the board considers the level “just adequate given the level of risk that we have in doing business in our environment”.
Indeed, the landscape of Nigeria’s banking sector has changed radically since a string of bail-outs in late 2009 – not least due to mergers between Oceanic Bank International and Togo’s Ecobank as well as Access Bank and Intercontinental Bank. Despite opportunities for consolidation remaining, however, Emefiele sees little benefit in Zenith striking its own deal.
“A couple of [investors] have asked us in the past whether we are interested in M&A – we’ve always said no,” he says, pointing out that a 4x oversubscription to the 2004 IPO allowed the bank to meet the N25bn (US$158mn) minimum-capital requirement set by the central bank at a time when other industry players had thought industry takeovers were compelling. “Since then we have never shown any interest in M&As,” he adds. “We’ve always preferred growing the bank organically.”
The management team is now focused on 2013 growth plans, including adding branches to its network, expanding its mobile banking business – for which it was recently granted a licence – and growing its corporate business in sectors including oil and gas, telecoms and infrastructure.