Posted by Babajide Komolafe, Asst. Business Editor on
Diamond Bank Plc will from today offer to the investing public one billion ordinary shares for its initial public offering (IPO). The share offer scheme will last till September 12, 2005.
Diamond Bank Plc will from today offer to the investing public one billion ordinary shares for its initial public offering (IPO). The share offer scheme will last till September 12, 2005.
The bank's shares are priced at N6.80 per 50 kobo share, a sizeable discount on its quoted price of N7.75 at the Nigerian Stock Exchange. The offer is coming on the heels of the bank's Completion Board Meeting which held in Lagos last week Wednesday.
Capital market watchers expect a smooth sail through for the bank's initial public offering, especially in view of the very good operating performance posted for its year just ended. Also the relatively small amount the bank expects to raise through the IPO plays well for market perception and in favour of Diamond Bank.
The offer document gives insight into the strategic aims and nature of the offering, namely, transactional capacity building via a massive branch expansion programme, information technology deployment and venture into pension custodian services business which in summary will enhance the bank's capacity to execute transactions.
The bank had last year executed a highly successful private placement share offer scheme which took its shareholders' funds from N6.7 billion to well over N18 billion. Recently, the bank also signed a Memorandum of Understanding (MoU) with Lion Bank of Nigeria Plc that will culminate in the outright acquisition of the later. Diamond Bank is believed to be seriously negotiating a second acquisition to be consummated before year end.
According to Diamond Bank's Chief Financial Officer, Mr. Ohis Ohiwerei, who spoke at the recent listing of the bank's shares at the Stock Exchange, the bank's strategic goal is to take its shareholders' funds to N35 billion by year end.
The bank's audited results for 2005 reveal that shareholders' funds currently stand at N20.7 billion after 100 per cent retention of profit for the year.
With an expected addition of about N6 billion at the consummation of the Lion Bank consolidation deal, the Bank's shareholders' funds will be in the region of N27 billion and well over N30 billion after the IPO.
However, the IPO is still part of the bank's strategic plan as corroborated by its management which says the IPO was necessary in order 'to raise funds with which the bank plans to strengthen its capability to exploit the emerging business opportunities already identified."
Diamond Bank has continuously demonstrated its capacity to rally big ticket projects. A few weeks ago, the bank was among four other banks granted in-principle approval by the Pension Commission (PENCOM) to venture into pension custodian business through its new subsidiary, Diamond Custodian Services Limited.
Also recently, the International Finance Corporation (IFC), the private sector arm of the World Bank group, signed an agreement to provide a seven-year loan of up to $30 million to Diamond Bank Plc. This arrangement, in addition to an on-lending facility with the Netherlands Development Finance Company (FMO), demonstrates the confidence international finance organisations have in the bank's management.
It is expected that the capital injected from the IPO and other consolidation efforts will further boost Diamond Bank's capacity to play a leading role in the post consolidation banking industry.