Investors scramble for FCMB shares ahead of Public Offer

06th Jan 2005, Source: Vanguard Newspapers

There are indications that investors are scrambling for First City Monument Bank (FCMB) Plc following the price upsurge of its stocks on the Nigerian Stock Exchange (NSE). The share price of the bank has significantly risen by 50.1 per cent or N1.73 per share from N3.45 per share it was recently listed on the Exchange to close on Tuesday at N5.18 per share.

Stockbrokers have stated that the rise in the price of FCMB shares on the stock market was not unconnected with the expectation of a higher market price in its proposed Public Offer.

According to stockbrokers " the rise in the price of FCMB shares is a result of the short supply of the equities in the market as investors are keeping hold on their shares for profit making when the Initial Public Offering (IPO) of the bank opens early February, 2005.

Also investors are afraid that the price may spring to above N6.00 per share before the IPO opens. Consequently prospective investors are currently rushing for the shares which are in short supply. This means that the IPO price may be within the range of N5 and N6 per share depending on whether the offer price would be put on a discount."

Speaking during the listing of the bank's shares on the Exchange recently, the Group Chairman of FCMB, Otunba Michael Balogun emphasized on the bank's consolidation saying " FCMB has in place a three-stage plan towards complying with the minimum capital requirement of N25 billion.

Private placement of N3 billion which was successfully completed. The N4.5 billion raised represents 50 per cent over subscription. A good number on institutional investors subscribed, which include Total Pension Fund, Oando Pension Fund, Gateway Holdings, Royal Exchange Assurance. In addition almost half a billion came from foreign portfolio investors
IPO of N16 billion
Merger/acquisition of banks with strong regional presence.

He noted that the bank has already signed an MOU with a mid sized bank, which has strong roots in the Northern part of the country and is currently engaged in discussions with another bank to complement its strategy.

According to him "The bank's recent growth indices reflects a consistent, positive and impressive movement, which strongly indicates that astute investors will be coming into FCMB that is at its early stages of an upswing."

Analysis of the bank's financial position show that its investment worth N100,000 in 1983 has risen to over N500,000,000 as per listing. Profit before tax rose by over 799 per cent over a period of 18 months (April 2003 to November 2004). As at November 2004, total assets plus contingents have grown to N59 billion. Total deposits recorded a cumulative growth of 148.74 per cent between April 2003 and November 2004

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