Tony Elumelu To Increase His Stake In UBA

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On Friday, speaking at UBA’s annual general meeting in Lagos, the chairman of United Bank for Africa (UBA), Tony Elumelu, disclosed plans to increase his stake in the financial institution.

According to him, he would buy more UBA shares by reinvesting his dividends through the rights issue.

He said, “I am advising shareholders, as you get your dividends, reinvest a significant part of it. My group and Iould reinvest 100 percent of the dividends we get. If we don’t do so, we are leaving food on the table for others who did not labour for it.”

Continuing, Elumelu said, the shareholders’ money is estimated to be about N2.1 trillion to N2.03 trillion. He increased his stake in UBA by 161.90 million last year, from 2.38 billion (direct and indirect) shares in 2022 to 2.54 billion (direct and indirect) shares.

In response to the Central Bank of Nigeria’s (CBN) instruction that UBA and other commercial banks holding foreign licences increase their capital base to N500 billion, the company is executing a rights issue.

UBA has a capital base of N115.82 billion, which is N384.19 billion below the requirement for international licence holders.

Elumelu continued, saying “What we ask to raise is to take your capital to 500 but the central bank has said they need this money by additional inflow, so if it was an issue of recapitalisation of your earnings, of your reserves, we won’t ask shareholders to bring anything. For any shareholder that is unable to pick up his or her right, you are leaving value on the table.”

“If the shareholders fund is N2 trillion, and today the actual paid up is N115 billion, it means you are going to bring in 385. If you bring in 385 and the shareholders don’t take anything, it means the bank can go to people who have not suffered for their retained earnings that we have. It is quite unfortunate, but it is what it is.

“Shareholders, please, we will take everything that comes to us. We will take all our rights but we don’t like to eat alone.”

Elumelu stated that the rights issue will be handled in phases. According to him, current shareholders would be able to reinvest during these phases, which will align with the banks’ dividend payments.

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“One of the resolutions we are proposing is to have rights issues carried out in series. We are going to have the first one soon, we will have the second one maybe after we do a half-year interim audit,” Elumelu said.

“We will have another next year when we finish another general meeting. The point is to give shareholders the opportunity to raise money from their own investment to reinvest.”

UBA To Raise Capital Through Private Placements

Following this information that made it to the top banking and finance news in Nigeria, Elumelu clarified that recapitalization consists of three stages: rights issue, private placement, and public offering, and stated that it is not a cause for concern.

He further expressed doubt that it would reach the public offering stage, as shareholders would be selling their shares at a discounted price.

According to Elemelu, one of the resolutions includes private placement because UBA wants to give people in Africa, especially in the nations where it presently conducts business, a chance to invest in the bank.