BusinessGTCO Targets July For N500bn Capital Raise

GTCO Targets July For N500bn Capital Raise

June 17, (THEWILL)- The Guaranty Trust Holding Company Plc says it has concluded plans to raise about N500bn starting in July.

This was disclosed in a notice of its preliminary prospectus filed with the Securities and Exchange Commission.

According to the communication, the banking group is seeking to raise about N500bn via the issuance of its ordinary shares of 50 kobo each.

The number of shares and the price range for the offering have yet to be disclosed.

On the use of the proceeds of the offer, GTCO said, “The net proceeds of the proposed offering will be used for (i) the growth and expansion of the GTCO Plc Group businesses. Such planned growth and expansion will be effected through investment in technology infrastructure to fortify existing operations, the establishment of new subsidiaries and selective acquisition of non-banking businesses; and (ii) the recapitalisation of Guaranty Trust Bank Limited (GTBank Nigeria).”

Regarding its target investors, the group said the proposed offering was structured as an institution offering targeted at eligible investors and for retail offerings within Nigeria. For the international market, institutional investors would be targeted via private placements.

Earlier in the year, GTCO indicated plans to raise $750m in capital, following the announcement of new capital requirements for banks by the Central Bank of Nigeria.

Guaranty Trust Holding said it could issue shares or bonds in Nigeria or internationally to raise the funds.

The group added that the filing of its preliminary prospectus was undertaken with a concurrent filing of a preliminary universal shelf registration statement, permitting it to establish a multi-currency securities issuance programme, “To issue various types of securities, or any combination of such securities, in one or more offerings, from time to time, to raise proceeds in an aggregate amount of up to $750m (or equivalent amount in Nigerian Naira) in the Nigerian/international capital markets during the validity period of the Programme”.

The proposed offering is expected to be the first issuance under the programm

THEWILL reports that Guaranty Trust Holding Company Plc (GTCO) released its Q1-24 unaudited financial statements on Friday, reporting a whopping 696.1% y/y rise in earnings per share (EPS)  to N16.24 for the period under review as against N2.04 in Q1 2023.

The impressive growth in the Holdco’s earnings was driven primarily by the fair value gain on the group’s financial instruments: N331.55 billion  compared to Q1-23: loss of NGN99.00 million, coupled with expansion in its funded income line which rose by 170.6% year-on-year.

Interest income advanced by 170.6 percent year-on-year to N281.65 billion, boosted by higher income from loans and advances to customers which recorded  (a 91.0 percent rise year-on-year), investment securities (grew by 307.5 percent year-on-year) and cash and balances with banks (+265.9% y/y).

“We note that the Holdco’s earning assets increased by 104.3% YTD to N10.18 trillion as the high yielding environment also supported growth in core income.

“Sequentially, interest expense rose by 147.9% y/y to NGN54.35 billion, primarily driven by the higher interest paid on customer deposits (+141.0% y/y) as the group’s deposits surged to NGN9.20 trillion (YTD: +87.3%).

 

“We however note that the Holdco recorded a slight deterioration of its funding mix (CASA as at Q1-24: 88.3% vs FY-23: 88.6%). Accordingly, the Holdco recorded a 176.7% y/y increase in

 

Following higher charges for loan impairments (which rose by 291.8 percent y/y), the net Interest income (ex-Lifelong Loan Entitlement) settled  to N213.81 billion, translating to a 171.7 percent y/y growth.

GTCO witnessed a remarkable 666.4% y/y increase in its non-interest income to N394.86 billion, majorly driven by the N331.55 billion fair value gain recorded for the Holdco’s financial instruments (Q1-23: loss of N99.00 million) as income from net fees and commission (+74.5% y/y) and FX trading (+48.9% y/y) also increased. Elsewhere, we highlight that the group recorded a higher FX revaluation loss of N12.67 billion (+145.1x y/y) in Q1-24.

Operating expenses (OPEX) grew by 76.9% y/y to NGN99.33 billion following the higher personnel expenses (+114.4% y/y) and regulatory fees – AMCON levy (+33.7% y/y) and deposit insurance premium (+48.5% y/y). Given that operating income (367.4% y/y) grew faster than OPEX, the group’s operational efficiency improved significantly as its cost-to-income ratio (ex-LLE) settled at 16.3% (Q1-23: 43.1%).

As expected, GTCO’s profitability was stronger, with profit-before-tax settling 587.5% higher year-on-year to NGN509.35 billion. After accounting for a higher income tax charge of NGN52.21 billion (+227.9% y/y), PAT settled at NGN457.13 billion (+685.9% y/y).

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ExxonMobil, Seplat $1.28bn Agreement:

NNPC Withdraws Suit Against Deal

The Nigerian National Petroleum Company Limited has applied to a High Court of the Federal Capital Territory, Abuja, to stop its ongoing legal action against several subsidiaries of Mobil Nigeria and the Nigerian Upstream Petroleum Regulatory Commission.

NNPC in a motion, filed on June 11, 2024, by their legal counsel Afe Babalola & Co., requested the court to grant leave for discontinuance and to strike out the suit, with the provision to relist it should the settlement process fail.

NNPC, in the motion stated that the application was part of a broader effort to finalise a settlement agreement involving the divestment of 100 per cent interest in Mobil Producing Nigeria Unlimited to Seplat Energy Offshore Limited.

As stated in the motion, one of the conditions required for the Settlement Agreement requires NNPC to withdraw the suit to facilitate the settlement

NNPC’s counsel contended that the discontinuance is in the interest of justice which promotes an efficient resolution without prolonged litigation.

The motion also asks the court to strike out the suit without costs, emphasising the parties’ commitment to an amicable settlement.

The agreement includes clauses to align the interests of all parties involved and finalise the transaction.

In an affidavit deposed to by a litigation manager at Afe Babalola & Co., Isaika Popoola, he detailed the history of the case, the arbitration process, and the terms of the settlement agreement.

Popoola noted that the parties had held several meetings to resolve the dispute concerning the divestment of MPNU shares to Seplat.

The initial suit, filed on July 5, 2022, was referred to arbitration by the court on August 3, 2022.

Recent negotiations led to a decision to settle the dispute out of court.

The motion states the court’s role in encouraging dispute resolution through arbitration, conciliation, and mediation, in line with Order 19 Rule 1 of the High Court’s rules.

NNPC noted that the discontinuance is essential to complete the settlement process and that the application complies with Order 24 of the High Court of the Federal Capital Territory Civil Procedure Rules 2018.

The motion further stated that relisting of a discontinued suit if the out-of-court settlement fails ensures that NNPC retains the right to seek judicial recourse should the settlement not be concluded successfully.

“The applicant humbly urges Your Lordship to grant leave to discontinue this suit and consequently strike it off the court’s cause list.

“Granting this application aligns with the policy of this Honourable Court and facilitates the finalisation of the settlement process.” the motion stated.

On May 31, 2024, The PUNCH reported that Nigeria might add 480,000 barrels to its daily crude oil output as NNPC and ExxonMobil took a step towards resolving the disagreement surrounding the sale of the latter’s asset to Seplat Energy.

The report stated that NNPC confirmed it had signed a settlement agreement with ExxonMobil companies in Nigeria over the proposed divestment of a 100 per cent interest in Mobil Producing Nigeria Unlimited to Seplat Energy Offshore Limited.

This was after President Bola Tinubu announced his intervention in the debacle between NNPC and ExxonMobil hindering the sale of the assets to Seplat.

The Minister of State for Petroleum Resources, (Oil), Heineken Lokpobiri, said recently that Nigeria had lost about $30bn in the past two and a half years as a result of the unsuccessful divestment.

The minister expressed concerns that Nigeria was losing about 480,000 barrels of crude oil per day due to the Seplat/ExxonMobil crisis.

He said the asset was producing about 600,000bpd until the crisis began in 2022, saying the nation was losing millions of dollars daily.

THEWILL recalls that ExxonMobil and Seplat Energy had in 2022 announced a $1.6bn sales agreement deal that would see Seplat purchase ExxonMobil’s complete shares in the NNPC.

However, just when all hopes were high for the completion of the deal, a letter dated May 16, 2022, by the Nigerian Upstream Petroleum Regulatory Commission to ExxonMobil, stated that the deal could no longer hold because NNPC had exercised its right of pre-emption first refusal on the assets.

Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party chooses to trade them off.

About the Author

 
Sam Diala, THEWILLhttps://thewillnews.com
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

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