Pan-African banking group Ecobank on Monday launched a $2.5 billion rights issue and public offer on three West African stock exchanges in the biggest cross-border operation of its kind on the continent. The simultaneous offer, which opened at 1000 GMT on Monday and will close on October 3, ran on the exchanges in Ghana and Nigeria and on the West African regional BRVM bourse in Ivory Coast - a range that encompasses 10 African countries in all.
Ecobank executives and analysts said the offer, which will be used to fund the fast-growing expansion of the Togo-based regional banking group, had attracted widespread interest and was expected to be oversubscribed.
"The premium on the offer is very attractive, it will make many investors take part," Sunny Nwosu, president of the Independent Shareholders' Association of Nigeria, told Reuters. "The fundamentals are also very attractive, considering the sound management in place, its spread and share of the market. I think the offer will be oversubscribed by investors," he added.
In Ivory Coast's commercial capital of Abidjan, where the regional BRVM exchange is located, an official at EDC Investment Corporation, one of the stockbrokers sponsoring the launch, said they had received many calls about the offer.
"Many people told us they were going to subscribe," he said. Ecobank is offering 3.76 billion shares to existing shareholders at $0.27 per share and at a rate of five new shares for every nine held on August 18. The public offer is made up of almost 5.12 billion shares at $0.29 each.
The pricing for shareholders implied a 20 percent discount to the 30-day volume weighted average on all three exchanges, while the discount for the public offer was 12.5 percent. Ecobank, based in Togo's capital Lome, has more than 10,000 employees and more than 500 branches across 25 countries in Africa. It has expanded out of its traditional base in West Africa and in June bought a 75 percent stake in Kenya's EABS.
Michael Ashong, managing director of Ecobank Development Corporation, the regional investment bank of the Ecobank Group, told Reuters bank chiefs had been able to test potential interest in the offer during a recent road show. This had involved meetings with institutional investors in 18 cities across North America, Europe, Asia and Africa. "We really saw a lot of interest ... we noticed that our operations and performance on the three stock exchanges were being tracked," Ashong said.
The bank said it would use the capital raised to consolidate its position as the leading Pan-African banking group, by expanding its network of branches and opening new ones on the African continent. It also plans to open offices in London, Paris, Dubai and Beijing. The increased capital would help modernise the group's technology platform, the bank said. Shareholders approved proposals in May for the fast-growing banking group to raise $3 billion through a debt or equity issue.