FCMB raises N20.686bn from debt market to shore up capital
By Cynthia Ezekwe
FCMB Group Plc has successfully completed the issuance of a N20,686,000,000 series I perpetual 16 per cent fixed rate resettable NC5.25 Additional Tier 1 Capital (AT1) subordinated bonds under its N300 billion debt issuance programme.
The firm, in a regulatory filing, signed by its secretary,Olufunmilayo Adedibu, disclosed that 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 the statement, the book build commenced on January 24, 2023, and closed on February 3, 2023, the AT1 instrument was issued at a clearing coupon rate of 16.0 per cent per annum, while Chapel Hill Denham Advisory Limited and FCMB Capital Markets Limited acted as the issuing houses to the bond. It also stated that 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.
FCMB stated that the successful Series 1 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.
The financial holding company disclosed that net proceeds from the Series 1 Bond will be invested in its banking Subsidiary,First City Monument Bank Limited. The move, it explained, is expected to enhance the bank’s total capital adequacy ratios, which will enable the Group and the Bank to expand its support for the growth and development of the Nigerian economy.
Ladi Balogun, group chief executive of FCMB Group Plc while commenting on the series 1 bond issuance said, “FCMB Group Plc is grateful to our investors, advisers and regulators, particularly the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN), for their support on the maiden issuance in our N300 billion bond programme.’’
According to Balogun, the innovative structure of a perpetual, income yielding, bond that qualifies as tier 1 capital is a first of its kind in the domestic capital markets. Highlighting the benefits of the instrument for stakeholders, he pointed out that 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.
He further expressed his delight over the company’s ability to support its largest banking subsidiary towards the attainment of its growth, risk management and strategic objectives with the investment.
Yemisi Edun, managing director,FCMB said the bank is very proud to be a part of a group that embraces innovation. He thanked the investor community for their support which will enable the bank to achieve its long-term strategy.
Edun said the AT-1 bond will enable the Bank to finance incremental term lending in priority sectors,in addition to strengthening its capital base which will comply with the forthcoming application of Basel III capital requirements.