Tony Elumelu faces $18 million loss in UBA stake

Omokolade Ajayi -
Key Points
  • Tony Elumelu's stake in UBA dropped by $18.1 million due to Nigeria's naira devaluation, despite the bank's strong local currency performance.
  • UBA’s stock surged 31.6% in naira terms, but its dollar-denominated share price fell 24.5%, reflecting the impact of Nigeria's currency crisis.
  • UBA posted a $320.9 million profit for 2024, up 16.92%, demonstrating resilience amid economic challenges and plans for global expansion.

Nigerian business tycoon Tony Elumelu has faced a significant setback this year, with the value of his stake in United Bank for Africa (UBA) dropping by $18.1 million. This decline stems from Nigeria’s naira devaluation, which has offset gains in UBA’s stock performance.

Elumelu, who owns a 7.43 percent stake in the pan-African financial services group—equivalent to 2,542,511,824 shares—has seen the dollar value of his holdings shrink despite a strong performance by the bank on the Nigerian Exchange (NGX) in local currency terms.

Naira devaluation erases UBA gains

UBA shares surged by 31.58 percent this year, yet the 46.3 percent devaluation of the naira against the dollar erased potential local currency gains of $23.36 million, leaving Elumelu with a net loss in dollar terms.

This currency-driven loss underscores the economic challenges Nigerian business leaders face amid exchange rate volatility. For Elumelu and other shareholders, the naira’s plunge has undermined dollar-based returns, even as UBA continues to deliver impressive performance.

UBA profits up, dollar valuation down

UBA, a leading player in Nigeria’s financial services industry, operates across 24 countries spanning four continents, including major hubs such as the UK, the United States, France, and the United Arab Emirates.

Despite Nigeria's macroeconomic headwinds, the bank posted a profit of $320.9 million for the first nine months of 2024—a 16.92 percent increase from $274.84 million in the same period last year—demonstrating resilience in navigating volatile market conditions. Looking ahead, UBA plans to expand its global footprint with a new branch in Saudi Arabia by 2025.

UBA’s dollar valuation has slumped amid the naira’s steep devaluation. While its stock climbed 31.6 percent year-to-date in naira terms, from N25.65 to N33.75, its dollar-denominated share price fell 24.5 percent, from $0.029 to $0.022. The decline cut UBA’s market cap below $750 million, highlighting the toll of Nigeria’s currency struggles on investor returns.

Tony Elumelu’s stake declines by $18.1 million

For Elumelu, the naira’s volatility has had a profound effect. In naira terms, the market value of his stake increased by N18.11 billion this year, rising from N65.22 billion to N85.8 billion.

Yet, in dollar terms, his holdings declined from $73.96 million at the start of the year to $55.85 million—a loss of $18.11 million. This highlights the challenges posed by Nigeria’s volatile currency on shareholder wealth.

UBA stands as a pillar of Africa’s banking sector, demonstrating resilience amid economic pressures. Elumelu exemplifies the challenges Nigerian business leaders face, navigating exchange rate instability, inflation, and other macroeconomic hurdles while driving growth.