Sterling Bank seeks to raise $400m through debt, equity

By The Rainbow

Nigeria's Sterling Bank Plc plans to sell $200 million of debt to fund operations and increase branches.

The sale, in multiple currencies, will increase the bank's fundraising plans to $400 million, Chief Executive Officer Yemi Adeola said on Tuesday.

. The bank is also seeking to raise $120 million from a private placement and $80 million in a rights offer, he said. The share sale to existing holders will start on June 24.

Adeola said that rights issue of 5.89 ordinary shares of 50k each would be sold at N2.12 per share for expansion of business operations, adding that it would be issued on the basis of three new ordinary shares for every eight ordinary shares held by shareholders as at May 20.

According to him, out of the proceeds, N4.24 billion would be used for branch expansion, N1.82 billion for infrastructure upgrade, while N1.21 billion would go for information technology. According to him, N12.13 billion will be used to increase the bank's working capital. He explained that the rights issue was the beginning of the bank's capital raising journey agreed upon by the shareholders in 2012.

He said that the management had laid solid foundation for the bank's franchise in the last seven years as its shareholders' funds had reached over N40 billion. Adeola disclosed that the bank would open additional 48 branches across the country to strengthen its retail banking franchise. The issuing house to the issue is Sterling Capital Markets Ltd, while CardinalStone Securities Limited will act as stockbrokers.

Sterling Bank is joining other Nigerian lenders seeking to raise funds to expand branches and boost lending to the energy industry in Africa's top oil producer.

The nation's banks are returning to profit after the industry came close to collapse because of the global debt crisis in 2008.

Africa's most populous nation, and second-largest economy after South Africa, is selling majority stakes in power plants and allowing private investors to acquire as much as 60 percent in six transmission and 11 power distribution companies that are being spun out of the former state-owned utility.

Å¡ Banks have increased lending to the oil industry as smaller producers expand drilling. Companies such as London-based Heritage Oil Plc and Lagos-based Neconde Energy Ltd. bought stakes in fields owned by Royal Dutch Shell Plc, Eni SpA and Total SA.

Growth in the $269 billion Nigerian economy will quicken to

7.2 percent this year from 6.3 percent in 2012, International Monetary Fund projections show. That compares with an estimated 5.6 percent growth rate for Sub-Saharan Africa. The euro area's economy will probably contract 0.6 percent this year, according to the European Central Bank.

Sterling Bank lost 4.2 percent to 2.5 naira as of 1:25 Lagos. The stock has advanced 55 percent this year, compared with the 32 percent rise of the Nigerian Stock Exchange All- Share Index.