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Union Bank signs deal with new investors

By on July 12, 2011

Union Bank  said on Tuesday it had signed a detailed recapitalisation agreement with a group of institutional investors led by the African Capital Alliance (ACA) private equity firm.

Under the deal, which was agreed in principle in March, ACA will invest $750 million — $500 million in equity and $250 million in tier 2 capital. The bank will launch a rights issue to existing shareholders to complement the capital injection.

The Asset Management Corporation of Nigeria (AMCON), a state “bad bank”, will bring Union Bank’s net asset value to zero as part of the deal, the lender said in a statement.

Union Bank was one of nine Nigerian banks rescued in a $4 billion bailout in 2009. The central bank has set a September deadline for the lenders to sign recapitalisation deals or face effective nationalisation or liquidation.