As part of efforts to enhance its operations, First Bank of Nigeria Limited (FirstBank) has concluded plans to raise fresh capital through the issuance of a new Tier-2 subordinated Eurobond. According to a reliable industry source, the bank will commence the road show for the bond on Thursday in London, preparatory to issuance of the dollar-denominated instrument.
THISDAY gathered that the financial institution plans to raise between $300 and $500 million from the Eurobond market.
The debt instrument is expected to continue to extend the tenor of the bank's dollar funding profile and support its continued lending to the corporate sector. It is also expected to raise the bank's capital base.
The issue is likely to be managed by Goldman Sachs and Citigroup that also managed the $300 million Tier-2 Eurobond that FirstBank issued in August last year.
In line with its desire to boost its international presence, FirstBank last year acquired 100 per cent equity interest in the West African subsidiaries of the International Commercial Bank Financial Group Holdings AG (ICBFGH). With that, the Nigerian bank expanded its operations to four more countries on the continent. It had acquired ICB Ghana, ICB Sierra Leone, ICB Guinea and ICB Gambia. The four new markets have a total of 28 branches of which 17 are in Ghana, five in Guinea, four in Gambia and two in Sierra Leone.
ICB's West African subsidiaries employ over 600 people, with over 120,000 customer accounts and are focused on the mid-corporate, small and medium scale enterprises (SMEs) and retail segments.
The transaction had expanded FirstBank's geographic footprint to cover 10 markets internationally, with existing operations outside Nigeria in the United Kingdom and France through its subsidiary, FBN Bank (UK) Limited.
FirstBank also has representative offices in Johannesburg, Beijing and Abu Dhabi.
The bank had in 2011 also acquired a leading bank in the Democratic Republic of Congo (DRC).
The Group Managing Director/Chief Executive Officer of FirstBank, Mr. Bisi Onasanya, had said the acquisition clearly aligned with the bank's strategic focus.
According to him, as a result of the acquisition, FirstBank would consolidate its position as one of the largest corporate and retail banking financial institutions in Africa (excluding South Africa).
He said the transaction would support the financial institution's ambition to win significant market share, expand its pan-African footprint and diversify earnings, while delivering value to shareholders.
"The acquisition fulfills the first stage of our ambitions to steadily build a broader and more diverse footprint across Africa. We are committed to developing a multi-local business model that broadens our geographic revenue base, while providing enhanced service delivery to our new customers.
"By leveraging the transfer of FirstBank's expertise and execution capabilities, supported by the bank's robust risk management and corporate governance policies, there is a strong opportunity for an appreciable rise in the combined entity's asset turnover over time while net revenue synergies are set to improve profit margins," he explained.
According to analysts, the proposed issuance of the Eurobond by FirstBank is in line with the trend by Nigerian banks to raise dollar funding from the international capital market.
Access Bank had in June also issued a $400 million Tier-2 subordinated Eurobond; Zenith Bank Plc issued a $500 million senior Eurobond in April.
Both issues, which were also managed by Goldman Sachs and Citigroup, were highly successful and oversubscribed. Analysts expect the prospective FirstBank issue to also do well, given the appetite of investors for issuances from leading Nigerian institutions.