NSE Lists N35bn UBA Bond

The Nigerian Stock Exchange (NSE) last week listed United Bank for Africa Plc (UBA) N35 billion bond.The admission of the N35 billion bond, which has  14 per cent coupon, raised the number of corporate bonds in the market to 13. UBA issued the bond last year as part of its N400 billion Medium Term Note Programme. 

The debt offer, which matures in 2018, had received  100 per cent subscription from six applications, UBA had explained last year.

Before the N35 billion,  the bank had raised N20 billion seven-year debt at 13 per cent  from local investors and pension funds. That was the first tranche of the 400 billion bond issuance program, to strengthen its capital base and help increase lending.

UBA, which operates in 19 African countries and manages more than 7.5 million bank accounts, had said that it had been raising capital to enable it turn deposits into loans, without breaching the regulator’s limits on a bank’s exposure to a single borrower.

According to the bank, it aimed to  grow its loan book by 15 to 20 per cent in 2011.
As part of making the bank sustain its pan  Africanism vision, shareholders of the UBA last month overwhelmingly voted in favour of  its plan to  restructure into a financial services holding company (holdco).

By the plan, UBA  will operate a new structure, where a non-operating company to be listed and known as UBA Holdings Plc, will become the parent company of three intermediate holding companies namely; United Bank for Africa Plc, UBA Africa Holdings Limited and UBA Capital Holdings Limited.

Speaking at the meeting, the Group Managing Director/Chief Executive Officer of UBA, Mr. Phillips Oduoza, said the bank would remain a listed entity on the Nigerian Stock Exchange.

According to him, this new move would eliminate duplication across business lines, whilst improving overall coordination, emphasing that  the assets of the commercial banking business in Nigeria would be ring-fenced from the other businesses.

He said: “The restructuring will also lead to shareholder value maximisation as the spin-off entities will post restructuring, be able to compete and grow their businesses through efficient asset utilisation and strategic focus independent of the bank. It is also expected to provide more robust governance and risk management framework, driven by core principles of responsibility and accountability.”

He added that the  restructuring would  also lead to shareholder value maximisation as the spin-off entities will post restructuring, be able to compete and grow their businesses through efficient asset utilisation and strategic focus independent of the bank.

Speaking in the same vein, Executive Director, Group Executive Office, Mr. Emmanuel Nnorom, said the Holdco structure would create a unique platform for  broader range of business and service offerings to entrench the Group’s market competitiveness and allow respective management of each entity to be better focused.

“Value will be unlocked for the group, as investors will gain a deeper understanding of component sub-businesses of the UBA Group and will be better able to ascribe values that match the earnings and growth profiles of these businesses.  It will also provide each entity with easier access to long term capital to finance growth thus protecting and creating value in two ways for shareholders,”  Nnorom explained.

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