Tony Elumelu to increase stake in UBA as bank seeks capital

Tony Elumelu, chairman of United Bank for Africa (UBA), has announced plans to increase his stake in the financial institution.

Elumelu spoke on Friday during UBA’s annual general meeting in Lagos.

The businessman said he would buy more UBA shares by reinvesting his dividends through rights issue.

“I am advising shareholders, as you get your dividends, reinvest a significant part of it. My group and I, we would reinvest 100 percent of the dividends we get,” Elumelu said.

“If we don’t do so, we are leaving food on the table for others who did not labour for it.”

Elumelu said the shareholders’ fund is roughly between N2.03 trillion and N2.1 trillion.

Last year, Elumelu raised his shares in UBA by 161.90 million to 2.54 billion (direct and indirect) shares from 2.38 billion in 2022.

The company is conducting rights issue following a directive from the Central Bank of Nigeria (CBN) that UBA and other commercial banks with international licences should raise their capital base to N500 billion.

UBA has a capital base of N115.82 billion, which is N384.19 billion below the requirement for international licence holders.

“What we ask to raise is to take your capital to 500 but the central bank has said they need this money by additional inflow, so if it was an issue of recapitalisation of your earnings, of your reserves, we won’t ask shareholders to bring anything,” Elumelu said.

“For any shareholder that is unable to pick up his or her right, you are leaving value on the table.

“If the shareholders fund is N2 trillion, and today the actual paid up is N115 billion, it means you are going to bring in 385. If you bring in 385 and the shareholders don’t take anything, it means the bank can go to people who have not suffered for their retained earnings that we have. It is quite unfortunate, but it is what it is.

“Shareholders, please, we will take everything that comes to us. We will take all our rights but we don’t like to eat alone.”

Elumelu said the rights issue will be carried out in multiple stages.

He said these stages will coincide with the banks’ dividend payments, enabling existing shareholders to reinvest.

“One of the resolutions we are proposing is to have rights issues carried out in series. We are going to have the first one soon, we will have the second one maybe after we do half-year interim audit,” Elumelu said.

“We will have another next year when we finish another general meeting. The point is to give shareholders the opportunity to raise money from their own investment to reinvest.”

UBA TO RAISE CAPITAL THROUGH PRIVATE PLACEMENTS

Elumelu said recapitalisation is not a concern, explaining that it involves three stages: rights issue, private placement, and public offering.

However, he expressed doubt that it would reach the public offering stage, as shareholders would be selling their shares at a discounted price.

Elemelu said the private placement is included in one of the resolutions because UBA aims to provide an opportunity for people across Africa, particularly in the countries where it currently operates, to invest in the bank.