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Fidelity Bank raises N30bn to fund critical sectors

By BusinessNews Staff on May 14, 2015

Fidelity Bank Plc has concluded plans to raise N30bn additional capital from the capital market to finance critical sectors of the economy.

The lender said the funds would be used to finance the Small and Medium Enterprises and boost the bank’s retail infrastructure.

The Chairman, Board of Directors, Fidelity Bank, Dr. Christopher Ezeh, said this in Lagos at the signing of the capital raising agreement between the bank and the issuing house, Planet Capital Limited.

He said, “This meeting is principally convened to execute the transaction document for the offer of N30bn, 16.48 per cent fixed rate subordinated unsecured bonds due in 2022.

“The bank now seeks to raise a seven-year fixed rate subordinated unsecured bond from the Nigerian capital market by way of offer for subscription.”

According to him, the application list opens and closes on May 13, 2015.

The chairman explained that the decision was taken to make resources available for the bank to finance its long- term investment and boost its lending to the SMEs and retail lending.

Ezeh, who noted that the bonds were exempted from taxation, said it also qualified as securities in which pension fund assets could be invested under the Pensions Reforms Act 2014, and as securities in which trustees could invest under the Trustees Investments Act, Cap T22, LFN, 2004.

The Managing Director, Fidelity Bank, Mr. Nnamdi Okonkwo, said that the significant growth the lender had recorded in its 2014 financials made the offer to be “firmly and fully underwritten”.

This, it said, also gave the investing public confidence in the bank that the lender would put the money into good use.

He said, “The bank has a significant growth from 2013, the profit grew by 78 per cent; our net interest margin grew; our retail strategy is paying off. Last year, we added 471,000 retail customers.”

On why the board resolved to go for bond rather than right issues, the managing director said the lender’s financial status was a consideration.

“Though this qualifies for a Tier II capital, if you look at our financials, you will see that our Capital Adequacy Ratio is 23.2 per cent, which means really we are very capitalised because the regulatory requirement is 15 per cent.

“So, we’ve raised this bond to channel into the Small and Medium Enterprises banking and to improve our retail infrastructure. The kind of growth we witnessed in the retail sector last year tells us that if we properly provide the right infrastructure for the segment, it should be the new frontier to help us to weather the difficult environment we are operating in.”

The Co-Chief Executive Officer, Planet Capital, Mr. Tony Anonyai, said the lender’s financial performance for 2014 was the stimulus for the signing of the bond agreement and the lender’s commitment to the development of the critical sector of the economy.

Anonyai said, “The impact of investing the funds in small scale industries is not what we can downplay. First, it allows entrepreneurs in our economy to take advantage of the funding that this brings.

“Nigerians are well endowed but cannot take creative step towards actualising their dreams because of lack of funds. I’ll like to commend Fidelity Bank for setting out to raise capital strictly to meet this sector of our market.”

He added that the transaction would deepen the country’s bond market because capital market could not fully develop if the bond market was not active.

[Punch]

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