UBA launches $144.2-million rights issue to boost capital and expansion

Oluwatosin Racheal Alabi -

Key Points

  • UBA launches N239.4bn($144.2 million) rights issue to meet CBN's capital requirements.
  • Proceeds will support lending, digital infrastructure, and African expansion.
  • Q3 2024 results show 83.2% growth in earnings and 54% asset growth.

United Bank for Africa (UBA), led by Nigerian businessman Tony Elumelu, is set to raise N239.4 billion ($144.2 million) through a rights issue, offering 6.8 billion ordinary shares at N35 per share. This initiative follows the Central Bank of Nigeria’s (CBN) introduction of stricter capital requirements for banks, prompting UBA to reinforce its capital base.

The rights issue, approved by shareholders in May 2024 as part of a N400-billion ($240 million) Equity Shelf Programme, allows existing shareholders to purchase one new share for every five held as of Nov. 5, 2024. UBA Group Chairman Tony Elumelu explained, “This rights issue aims to bolster our capacity to seize growth opportunities and maintain leadership in the banking sector.”

The bank plans to allocate the funds toward regulatory compliance, expanding lending capacity, investing in digital transformation, supporting sustainability initiatives, and scaling its African operations. Elumelu highlighted UBA’s commitment to fostering economic growth across Africa, citing the bank’s $6-billion pledge to support SMEs under the Africa Continental Free Trade Area initiative.

Shareholder accessibility and application process
The offer, accessible exclusively through the NGX e-offer portal, also provides shareholders the option to apply for additional shares beyond their allocation. UBA customers can manage their rights conveniently via the bank’s internet and mobile banking platforms, ensuring broad accessibility for investors.

Impressive financial momentum supports capital strategy
UBA’s third-quarter financial results for 2024 underscore its strong operational foundation. Gross earnings soared by 83.2 percent year-on-year to N2.39 trillion ($1.44 billion), while profit before tax increased by 20.2 percent to N603.48 billion ($3.63 billion). Profit after tax climbed 16.9 percent to N525.31 billion ($3.16 billion).

Total assets surged by 54 percent to N31.80 trillion ($19.14 billion), reflecting UBA’s robust market position and ability to fund growth initiatives.

With this rights issue, UBA is poised to enhance its financial resilience, meet regulatory demands, and further its ambitions as a leading pan-African financial institution.