Cynthia Ezekwe
Sovereign Trust Insurance (STI) Plc, a leading insurance company in Nigeria, has raised N1.432 billion in new equity capital from its shareholders. The company stated that the new shares issued as part of the capital raising process were listed on the Nigerian Exchange (NGX). The new shares were issued at a price of 50 Kobo per share, and a total of 2.864 billion shares were listed on the exchange.
The new shares have increased STI’s total issued and fully paid-up shares from N11.36 billion to N14.23 billion, with each share having a face value of 50 Kobo. This rights issue was allocated to shareholders on the company’s register as of Friday, July 22, 2022, on a ratio of one new ordinary share for every four ordinary shares held.
This latest capital raising is the second major fund raising exercise by STI in recent years, following a similar exercise in 2019, when the company raised N2.09 billion from shareholders. At the time, the company offered 4.17 billion ordinary shares at 50 Kobo per share.
In addition to approving the latest rights issue, shareholders also gave the company the authority to raise additional equity capital, up to the maximum amount of its authorised share capital. This was accompanied by a mandate for the board of directors to take necessary actions in the event of oversubscription of the initial offer.
In May 2019, the National Insurance Commission (NAICOM) released new capital requirements for insurance companies operating in Nigeria. The new rules require life insurance companies to have a minimum paid-up share capital of N8 billion, non-life insurance companies to have N10 billion, composite insurance companies to have N18 billion, and reinsurance companies to have N20 billion.Â
In light of the NAICOM’s new capital requirements, insurance companies were given until June 30, 2020 to comply. While this deadline has since been suspended, many insurance companies have been working to rebuild their capital base in anticipation of the new rules coming into effect.Â
