(Bloomberg) -- Guaranty Trust Holding Co. plans to raise $246.2 million in a share sale to inject more capital into its Nigerian unit, the most targeted by a lender in the nation since the central bank raised the industry’s capital threshold in March.
The country’s biggest lender by market value will offer 9 billion shares at 44.50 naira each from Monday through Aug. 12 for a net proceeds of 392.49 billion naira, it said in a statement on the Nigerian Stock Exchange’s website.
That’s more than the 343 billion naira in equity sought from investors by Access Holdings Plc, the country’s biggest bank by assets.
The requests for more funds bring into question the local capital market’s capacity to come up with the needed funds, which Bank Directors Association of Nigeria Chairman Mustafa Chike-Obi in April estimated would total 4 trillion naira ($2.5 billion), adding it would be “very difficult” for lenders.
The West African nation’s central bank increased the minimum capital requirements for lenders 10-fold and ordered two years for compliance as it seeks to bolster the defenses of an industry facing a steep decline in its currency, high inflation and a weak economy.
S&P Global Ratings said last week the recapitalization will spur mergers and acquisitions as some lenders won’t be able to make it as standalone banks.
“We expect relatively strong demand for Guaranty Trust equity on the basis of strong profitability, strong return on equity, low cost of funds and cost to income ratio as well as their future growth plans,” Samuel Sule, Renaissance Capital Africa’s chief executive officer, said by phone.
Guaranty aims to deploy about 94% of the offer proceeds toward recapitalizing GTBank over the next six months, while the rest are for growth and expansion through acquisitions in the pension-fund administration and asset-management fields over two years, according to the lender. It intends to offer half of the shares on sale to institutional investors and the rest to retail buyers, it said.
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(Updates with Access Bank’s plans in third paragraph.)
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