Investors are eagerly pursuing shares of Fidelity Bank Plc, as the leading commercial bank’s capital raising activities gain significant traction across various investor categories. The surge in investor interest is evident through substantial subscriptions to the bank’s ongoing rights and public offers, alongside heavy trading activity in the stock market.
Recent data highlights Fidelity Bank as the most active stock, surpassing both the banking sector and the broader market. The bank achieved a turnover of 1.73 billion shares valued at N18.27 billion across 1,579 transactions, dominating market activity. This represents 51% of the total volume and 35% of the total value traded for the week. In comparison, the total turnover for the Nigerian Exchange (NGX) was 3.39 billion shares worth N52.30 billion in 44,814 deals.
Despite a general market downturn, Fidelity Bank’s share price has appreciated by 0.05% to N10.75 per share, reflecting strong investor sentiment. This contrasts with the NGX All Share Index, which declined by 0.46%, and the NGX Banking Index, which fell by 0.48%.
The strong performance in secondary market trading underscores the attractiveness of Fidelity Bank’s capital offers. Investment experts have favorably reviewed the bank, with many reports recommending a “buy.” Current offer prices suggest an immediate gain of 11-18% for investors, a notable return compared to competitors.
Fidelity Bank’s hybrid offer includes a rights issue of 3.2 billion shares at N9.25 per share and a public offer of 10 billion shares at N9.75 per share, amounting to a total of N127.1 billion. Due to high demand, the bank has been approved to issue an additional 8.2 billion shares to accommodate potential oversubscriptions.
The offers will close on August 12, 2024, with a minimum subscription of 1,000 shares or N9,250 for the rights issue and N9,750 for the public offer. Afrinvest West Africa views these offers as cost-effective, given that transaction costs are borne by the issuing company, unlike secondary market transactions.
Experts from Arthur Steven Asset Management project a 57% capital gain for investors in the short term, highlighting Fidelity Bank’s shares as valuable inflation-hedging assets. The bank’s strong performance is underscored by a return on equity of 23% and consistent dividend increases over the past three years.
With a long-to-deposit ratio of 75% and a manageable debt-to-equity ratio of 1.34, Fidelity Bank is positioned for continued growth, supported by significant expansion in business operations and profitability. The bank has achieved an average annual profit growth of 64% over the past three years and boasts an impressive balance sheet size of N6.2 trillion.
Overall, Fidelity Bank’s solid performance and growth prospects have made it a standout choice for investors in the current market environment.