How mgt arrogance caused GTCO’s N191bn public offer shortfall

The public offer price of N44.50 per share and the arrogance of the management of the Guaranty Trust Holding Company Plc GTCO, led by Mr. Segun Agbaje, contributed to the lender’s N191.09 billion public offer shortfall.

The most profitable financial institution in Nigeria this week announced the outcome of its public offer of N400.5 billion, raising about N209.01 billion from new and existing shareholders, with a shortfall of N191.09 billion.

The management of GTCO on Monday said it raised a total of N209.41 billion from 130, 617 valid applications for 4,705,800,290 ordinary shares fully allotted, as against plans to raise 9,000,000,000 ordinary shares of 50 kobo at an offer price of N44.50 per share on the Nigerian Exchange Limited (NGX), equivalent to N400.5 billion.
As gathered by Media Bypass, the lender recorded only a 52% subscription out of the intended N400.5 billion capital-raising exercise.

The lender, in a statement, painted a wrong impression that the exercise was successful, calling it the first tranche of its equity capital raise programme.

It added that the completion of the capital verification exercise conducted by the Central Bank of Nigeria (CBN) and the approval of the Basis of Allotment of the Offer by the Securities and Exchange Commission (SEC).
In a regulatory filing at the NGX, Access Holdings stated that it had secured full regulatory approvals from the CBN and the SEC for its recently concluded rights issue of 17.77 billion ordinary shares of 50 kobo each at N19.75 per share, successfully raising the target amount of N351 billion.

The Group Chief Executive Officer of GTCO, Agbaje, in a statement said, “We extend our sincere appreciation to our new and existing shareholders, as well as the regulatory authorities, for their unwavering support during this initial phase of our equity capital raise.”

When the bank in August 2024 concluded its capital-raising exercise, its stock price was trading above N45.00 per share on the Exchange.

This, according to capital market stakeholders, was a higher price that discouraged new investors from participating in the public offer.
A reliable shareholder, in a chat with Media Bypass, stated that new investors were not interested in the price, given it was a public offer that came with a higher price.

The shareholder stressed that a hybrid offer could have given room for existing shareholders to take up their rights.

The likes of Access Holdings and the FCMB Group, which recorded successful capital- raising exercises from the Nigerian capital market, extended their rights issue or public offer by one or two weeks, creating room for more investor participation.

FCMB Group announced that it had successfully completed its public offer and raised about N147.5 billion from investing public, while Access Holdings successfully raised N350.96 billion to surpass the new minimum capital requirement of N500 billion stipulated by the CBN.
Fidelity Bank Plc, FBN Holdings Plc, and Zenith Bank Plc also extended their capital -raising exercises with the hope of attracting more investors to take up their rights.

In the case of GTCO, the management rejected the opportunity to extend its N400.5 billion public offer and will be heading back to the capital market in 2025 to raise fresh capital.

Proceeds from the combined equity raise will be strategically deployed to recapitalize the Group’s flagship subsidiary, Guaranty Trust Bank Limited (GTBank Nigeria), enhancing its ability to meet regulatory requirements and further solidify its position as a leading financial institution.

In addition, the funds will support Group-wide growth initiatives, including footprint expansion, product enhancement, and innovation across both Banking and Non-Banking subsidiaries.

GTCO remains committed to delivering sustainable value to its stakeholders and driving innovation across the financial services landscape in Africa.