• Sun. May 26th, 2024

UBA Proposes Major Recapitalization, Aims To Issue 10.8 Billion New Shares

ByHybrid News

Apr 17, 2024

United Bank for Africa (UBA) has announced its intention to substantially increase its issued share capital from N17.099 billion to N22.5 billion, through the issuance of 10.8 billion new ordinary shares, each valued at N0.50. This proposal is set to be presented to shareholders for approval at the upcoming Annual General Meeting (AGM), according to a recent notice from the bank.

The strategic decision aims to boost UBA’s share capital from its current 34.199 billion shares to a total of 45.999 billion shares. This increase is essential for the bank to meet its regulatory capital requirements and solidify its financial base. Currently, UBA’s combined share capital and share premium total N115.8 billion, which is substantially below the N500 billion required.

Bill A. Odum, UBA’s Group Company Secretary, explained that the recapitalization is crucial for maintaining the bank’s competitive edge and compliance with regulatory standards. The notice also included provisions for potentially increasing the capital further or canceling unallotted shares if necessary, to adapt to future financial strategies and needs.

Despite these efforts, UBA’s share price has experienced a 2.35% decline year-to-date, reflecting broader market uncertainties. Shares were trading at N25.00 as of April 15. This market sentiment is common in the banking sector currently undergoing recapitalization phases.

The bank has not yet disclosed specific pricing for the new share issuance but estimates suggest that if the shares sell for between N20 to N25, UBA could raise between N216 billion and N270 billion. This funding is expected to help bridge the substantial capital shortfall.

In addition to issuing new shares, UBA’s Board of Directors is seeking expanded authority to raise further capital through various instruments, including ordinary and preference shares, bonds, and convertible or non-convertible notes. This may occur through public offerings, private placements, rights issues, or other financial transactions, both in Nigerian and international markets.

The upcoming AGM will be a critical moment for UBA as it seeks to secure shareholder backing for these ambitious financial maneuvers, which are designed to strengthen the bank’s position in a challenging economic environment.

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