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Guaranty Trust Holding Company, the parent of Nigeria’s biggest bank by market value, will list in London after selling $105mn in shares to investors, as lenders rush to complete the country’s largest bank recapitalisation in decades.
Segun Agbaje, GTCO’s chief executive, told the Financial Times that a sale launched on Monday, and arranged by Citigroup, would meet a central bank target for all banks to raise capital by March next year, as the Nigerian economy recovers from a series of currency devaluations.
Lagos-listed GTCO, valued at N2,800bn ($1.8bn), is set to be the first Nigerian financial services company to secure a secondary listing in London next week, as lenders look abroad for capital and expansion after a 70 per cent drop in the naira versus the dollar in the past two years.
GTCO’s impending listing comes as the UK market has suffered from a dearth of initial public offerings in recent years, with a steady stream of companies being taken private or moving their primary listings to the US.
Metal investment group Cobalt Holdings scrapped plans for its London listing last month and homegrown fintech Wise said it would move its primary listing to New York.
“I have heard all the things about business moving out of London,” Agbaje said. “But I still think that in terms of being a financial centre, London still remains extremely attractive, especially for an organisation like us which is predominantly African and most of the revenues coming from anglophone west African countries.”
Nigeria’s central bank last year ordered banks to replenish their capital in order to rebuild buffers against bad loans after economic shock therapy under President Bola Tinubu, who cut fuel subsidies and let the official naira rate weaken to its true value.
CBN governor Olayemi Cardoso has said that local banks lacked the lending firepower required to support Tinubu’s goal of a $1tn economy by the end of the decade.
Guaranty Trust Bank, GTCO’s main unit, draws on low-cost retail savings for more than half of its deposit base while the group also has payments, pensions and asset management arms.
Agbaje said that year-on-year growth of more than 15 per cent in the bank’s loan book in the first quarter of this year reflected stabilisation in the naira and improving economic confidence.
“Under that kind of macro scenario, we as a bank and as a group feel a lot more confident, and that is the loan growth and deposit growth you see,” he said. “We are ready to take more risk.”
GTCO joins Greece’s Metlen Energy & Metals and private equity-backed software group Visma in planning a London listing.
GTCO is listing in the UK just over two years after the Financial Conduct Authority fined its UK banking division £7.6mn for “serious weaknesses” in anti-money laundering systems and controls between 2014 and 2019.
No money-laundering was found, but the FCA described the bank’s conduct as “particularly egregious” because it was also fined £525,000 a decade earlier for similar failings.
Industry experts expect Nigeria’s largest banks to meet the target to raise capital to at least N500bn for those with international operations, although mid-tier operators could opt for mergers or a downgrade of their licenses if they cannot raise additional capital.
The last major recapitalisation exercise, in 2004, led to the reduction of commercial banks in Nigeria from 89 to 25 as smaller lenders merged.
Agbaje said the bank was not interested in acquisitions, noting that in the last round of capitalisations “only two banks did not do an M&A deal, and we were one of them.”
