FBN shares soar, days after Airtel announced share buyback

Shares of First Bank of Nigeria Holdings Plc (FBN), the country’s second-biggest lender in terms of customer base, rose to a new high on Thursday.

This was after it recorded unusual trade volumes, just days after Airtel Africa announced its plans to buy back shares held by minority shareholders in Airtel Networks Limited, the Nigerian operating arm.

FBN is known to own shares in Airtel, an asset which analysts estimate may fetch FBN up to N60 billion in liquidity and some 40% of the valuation in realised gains on disposal of the asset.

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Expectations are strong on FBN’s sale of its investment in the second-largest telecommunications in Nigeria, as market sources say that the Central Bank of Nigeria (CBN) has mandated the lender to sell off the investments in unrelated non-financial services businesses.

At the end of trading hours on the Nigerian Exchange Limited (NGX), FBN shares closed higher at N10.05, after it traded as high as N10.65 during trading hours.

Surprisingly, 573 million units of the shares were traded on Thursday, mainly due to an off-market trade of 473m units of the stock, or 1.33% of the total outstanding shares of 35.9bn units, at N16.00 per share, an unusual trade done at 65% premium to the market, as market sources note. Trading activity on the stock represented some 60% of the total trade done on the NGX for the day.

The move on the stock started last week when 400m shares of the stock were sold in one single cross deal, said Chinenyem Anyanwu, Managing Director/CEO of Dependable Securities, a stock brokerage firm. As is the practice with such deals, those behind it were not revealed, according to him.

Interestingly, FBN shares have seen significant trade volumes since 06 September when 286m units of the stock were traded on the NGX, followed by another 496m units on 20 September. Just this week, the shares have gained 24.2%, rising from N8.05 on Thursday, 30 September 2021 to close at N10.05 on Thursday, 07 October 2021.

A client advisor at Funds Matrix and Assets Management Limited said the rally may not be unconnected to expectations of gains from the Airtel shares disposal but more importantly, there are speculations that there may be a new investor seeking controlling or influential interest in FBN Holdings Plc, thus reinforcing appetite in the stock.

From that date of Airtel Africa’s announcement, up until Thursday, FirstBank shares have risen by over 20 percent, he disclosed. 

 Airtel Africa, with a presence in 14 countries across Africa, on October 4, 2021, announced that its subsidiary Airtel Networks Limited (‘Airtel Nigeria’), had initiated a process under which it seeks to buy back the 8.27% minority shareholdings at an offer price of N55.81 per share.