GTCO files preliminary prospectus, eyeing ambitious N500bn fundraising

Cynthia Ezekwe

Guaranty Trust Holding Company (GTCO) Plc, recently took a significant step towards expanding its financing capacity by submitting a preliminary “red herring” prospectus with the Securities and Exchange Commission (SEC), aimed at securing regulatory clearance for the company’s plans to raise N500 billion in fresh capital.

According to investopedia, a red herring is a preliminary prospectus filed by a company with the Securities and Exchange Commission (SEC), usually in connection with the company’s initial public offering (IPO). A red herring prospectus contains most of the information pertaining to the company’s operations and prospects but does not include key details of the security issue, such as its price and the number of shares offered.

A statement from GTCO noted that  the number of ordinary shares to be offered and the price range for the proposed offering have not yet been determined.

“This is issued in reliance on Rule 283 of the Rules & Regulations of SEC, Nigeria. The notice read in part, this does not constitute an offer to sell or the solicitation of an offer to buy any securities,’’ the statement read. 

GTCO stated further that any offer, solicitation or offer to buy, or any sale of securities will be made only by a prospectus duly registered by the Securities and Exchange Commission in accordance with the provisions of the Investments and Securities Act, No. 29, 2007 (the Act) and the rules and regulations of the SEC made pursuant to the Act (the SEC Rules).

GTCO’s proposed N500 billion offering is envisioned to support the company’s long-term growth and expansion plans, according to the multinational financial services group.

The net proceeds from the offering will be channelled into a range of strategic initiatives that will bolster the company’s position in the Nigerian financial services sector. Specifically, GTCO intends to use the funds to invest in technological advancements that will enhance its existing operations, establish new subsidiaries to expand its product and service offerings, and possibly acquire non-banking businesses that align with its strategic vision.

“The proposed offering is structured as an institutional offering targeted at eligible investors and a retail offering within Nigeria and a private placing to persons reasonably believed to be qualified institutional buyers outside Nigeria (the international tranche),” the company noted.

GTCO explained that the proposed offering is anticipated to open by July, 2024, adding that the filing of the red herring prospectus was undertaken with a concurrent filing of a preliminary universal shelf registration statement.

The financial services group also stated that its universal shelf registration would enable it to set up a multi-currency securities issuance programme with an aggregate value of up to $750 million, or the equivalent in Nigerian Naira.

Under the proposed programme, GTCO would be permitted to offer various types of securities, or a combination thereof, in one or more offerings over a specified period. This would provide the company with a flexible and agile platform to secure financing in the domestic and international capital markets, as and when opportunities arise, in support of its long-term growth and expansion objectives.