Fidelity to raise $100m to finance bigger deals

Fidelity Bank Ghana Limited is to raise US$100 million from institutional and retail investors to enable it fund bigger transactions arising from its growth over the years.

The funds are to be raised through a rights issue and/or private placement where a share of the bank will be valued at not less than seven cedis, a resolution announcing the bank’s intention said.

The resolution added that the shares to be issued in return for the funds “shall not exceed 7.5 million ordinary shares or 30 per cent of the bank’s issued shares.”

Fidelity Bank currently has about 17.7 million issued shares, majority of which are in the hands of locals. Any attempt to issue more than 30 per cent of the existing shares will thus threaten its indigenous status.

“We are significantly undercapitalised compared to our peers in the industry. If we don’t raise this money, we won’t be able to give loans by September, we can’t continue with our expansion and bigger transactions will escape us,” the bank’s Managing Director, Mr Edward Effah, said at its annual general meeting in Accra.

The bank last October got US$20 million equity from the investment arm of the Arab Investment for Asia and Kuwait (AIAK) Group – AIAK Capital – and that, together with capital inflows from other sources, pushed its stated capital to GHC83.1 million as of December last year.

Fidelity’s MD, however, said the current stated capital was woefully inadequate given the businesses it anticipated to fund in the future.

“To support our growth and ensure that we participate significantly in the big transactions we lead, we need to raise about US$100 million,” he added.

Mr Effah mentioned power, the nascent oil and gas industry as well as corporate and consumer loans as the areas the expected funds would go into.

The bank’s profit after tax has, meanwhile, risen by 185 per cent in 2012, rising from GHC9.7 million in 2011 to GHC27.7 million last year.

Its operating income also increased from GHC79.6 million in 2011 to GHC138.8 million in 2012 following a jump in loans and advances to customers during the year.

The board recommended a dividend of 3.5 pesewas per share for the 2012 financial year.