Zenith Bank Plc, Nigeria’s largest financial institution by market capitalization, has announced a substantial capital-raising initiative, seeking to generate ₦290 billion (approximately $182 million) to fund its expansion strategy and enhance its loan portfolio. This move underscores the bank’s commitment to strengthening its market position and expanding its footprint both locally and internationally.
On Monday, August 1, 2024, Zenith Bank officially launched its combined share offer on the floor of the Nigeria Exchange Limited (NGX). The offer consists of 5.2 billion shares available to existing shareholders at a price of ₦36.00 per share, and an additional 2.7 billion shares offered to the general public at a slightly higher price of ₦36.50 per share. The offer is set to close on September 9, 2024.
Zenith Bank, which has been publicly traded since 2004 and now boasts a market capitalization of ₦1.9 trillion, has consistently delivered strong returns to its shareholders. This is evidenced by the bank’s dividend payments, which have reached as high as ₦4 per share, the highest among Nigerian banks. The bank’s commitment to maximizing shareholder value has made its shares particularly appealing to investors.
Adaora Umeoji, Group Managing Director and CEO of Zenith Bank, highlighted the bank’s impressive growth trajectory over the years, evolving from a mid-size lender to the largest tier-1 bank in Nigeria by market value. She noted that the bank’s corporate banking arm is a significant revenue driver, contributing 58% to the group’s total revenue, while the retail banking segment accounts for the remaining 42%. Umeoji also pointed out that all of the bank’s subsidiaries are profitable, contributing nearly 20% to the group’s overall profits.
Allocation of Funds
The capital raised from this initiative will be strategically allocated across three key areas:
- Strategic Expansion: Approximately 35% of the total capital raised, equating to ₦99 billion, will be directed towards expanding Zenith Bank’s operations, particularly in West Africa. The bank also plans to establish a presence in Paris, France, to consolidate its expansion into Francophone Africa.
- Working Capital: A significant portion, 45% of the raised funds (₦128 billion), will be used to bolster the bank’s working capital, particularly to serve its growing retail and SME segments. This reflects Zenith Bank’s focus on broadening its customer base, which currently stands at 33 million.
- IT Infrastructure: The remaining 20% of the capital (₦57 billion) will be invested in upgrading the bank’s IT infrastructure. This is part of Zenith Bank’s broader strategy to enhance its digital capabilities, ensuring it remains competitive in an increasingly technology-driven banking environment.
This capital raise is a crucial step in Zenith Bank’s ongoing strategy to maintain its leadership position in the Nigerian banking sector while pursuing growth opportunities across Africa and beyond. With a robust financial foundation and a clear vision for the future, Zenith Bank is well-positioned to continue delivering value to its shareholders and custome