Union Bank begins N50bn rights issue

Union Bank has started its Rights Issue through the sale of shares to existing shareholders to raise the sum of N50 billion after regulatory approval from the Securities and Exchange Commission, the CBN and the Nigerian Stock Exchange to beef up its capital base. The rescued bank said the rights issue will be open for subscription on September 20 and will close on Oct. 30. The bank is offering 12.1 billion shares at N4.10 each, issuing five new shares to investors for every seven already held.

Union Bank, set up 100-years ago, said it planned to spend 80 percent of the funds to enhance its regulatory capital and boost working capital. The bank, in which Atlas Mara Ltd, the African investment vehicle of former Barclays boss Bob Diamond, owns a 22.1 per cent stake, has said it planned to raise funds also to tap opportunities to lend to agribusinesses.

At last Mara in June said it was raising $200 million to increase its stake in Union Bank and other businesses. It said at the time it was buying a 13.4 per cent stake in the Union Bank from Clermont Group, taking its total holding to 44.5 per cent. Clermont International is among a consortium of local and foreign investors that own 65 percent, Union Bank said in its rights circular, adding that it was not aware of any investor trying to acquire a majority stake.

Union Bank was a former unit of Barclays Bank. Shares in Union Bank, which have gained 9.1 per cent so far this year, fell 4.67 percent on Wednesday to 5.70 naira on the Lagos bourse, a 28 percent premium to the rights price. The stock fell 20.3 percent last year.