By Rosemary Iwuala
FCMB Group Plc has successfully raised N20.686 billion from the debt market to finance its banking subsidiary First City Monument Bank Limited.
It said investing the proceeds in the bank is targeted at enhancing the Bank’s Tier 1 and total capital adequacy ratios and enabling the Group and the Bank to expand its support for the growth and development of the Nigerian economy
The capital raise is a Perpetual 16% Fixed Rate Resettable NC5.25 Additional Tier I Capital Subordinated Bonds under its N300 billion Debt Issuance Programme.
The Group’s AT1 Issuance is the first non-sharia local currency AT1 instrument issued in Nigeria and the Group’s maiden issuance of its N300 billion funding programme in the Nigerian Capital Markets to support its next phase of growth.
According to a filing on the Nigerian Exchange Limited (NGX), the booking commenced on January 24, 2023, and closed on February 3, 2023.
According to the institution, the offer was well received by the market with active participation from a diverse range of high-value investors, including Corporates, other Financial Institutions, Trustees and high net-worth individuals.
“The AT1 instrument was issued at a clearing coupon rate of 16.0% per annum,” it added.
Market observers said the successful Series I Bond issuance highlights the Group’s track record of innovation across a broad spectrum of the Nigerian financial service industry and is in line with the Central Bank of Nigeria’s desire for financial sector stability and well capitalized banks.
Commenting on the Series I Bond issuance, Ladi Balogun, Group Chief Executive of FCMB Group Plc said, “FCMB Group Plc is grateful to our investors, advisers and regulators (particularly the Securities and Exchange Commission and the Central Bank of Nigeria) for their support on the maiden issuance in our N300 billion bond programme.
“The innovative structure of a perpetual, income yielding, bond that qualifies as tier 1 capital, a first of its kind in the domestic Capital Markets, achieves 3 objectives for our investors: it is non-dilutive for existing shareholders; creates capacity for potentially improved earnings per share and dividends per share; and provides an attractive income stream for investors in this instrument,” He added.
He said the Group is pleased to have been able to support its largest banking subsidiary towards the attainment of its growth, risk management and strategic objectives with this investment.
Meanwhile, Yemisi Edun, Managing Director of First City Monument Bank Limited said, “FCMB is very proud to be a part of a group that embraces innovation and thanks the investor community for their support which will enable the Bank to achieve its long-term strategy.
“In addition to strengthening the Bank’s capital base which will comply with the forthcoming application of Basel III capital requirements, the AT-1 bond will enable the Bank to finance incremental term lending in priority sectors,” Edun noted.
The Managing Director also said that Chapel Hill Denham Advisory Limited and FCMB Capital Markets Limited acted as the Issuing Houses to the Series I Bond.
