What GTCO plans to do with its N400.5 billion capital raise
GTCO Holdings, the parent group of GT Bank has announced plans to commence a N400.5 billion public offering.
The group is offering 9 billion ordinary shares of N0.50 at N44.50 each.
GTCO is awaiting the SEC’s approval, with hopes that the public offering will commence in July 2024 and last for 21 business days.
During the “Facts Behind the Offer” presentation at the Nigerian Exchange (NGX) on July 8, 2024, Group CEO Segun Agbaje detailed the intended allocation of the funds to be raised.
His presentation highlighted the fact that N370 billion of the raised N400 billion will be allocated to the recapitalization of GT Bank Nigeria.
However, with a paid-up capital of N138.2 billion, GTCO Holdings needs to raise N361.2 billion to reach the N500 billion new minimum capital requirements.
The group’s allocation of N370 billion to the recapitalization of the banking subsidiary helps to highlight the disparity between holding companies and their banking subsidiaries.
Branch network expansion and refurbishment
The group proposes to use N138.5 billion of the N400.5 billion to open new branches as well as expand some of its existing branches, within and outside Nigeria.
In his presentation, Segun Agbaje emphasized the group’s commitment to expanding its subsidiary branch network, specifically highlighting Senegal, Kenya, Côte d’Ivoire, and Ghana.
He noted, “Branch expansion by N138 billion, but not branch expansions in Nigeria alone. You will see us branch out very aggressively in Nigeria, Senegal, Cote D’Ivoire, Ghana, and Kenya.”
Technology Infrastructure upgrades
Agbaje noted that the group’s technology infrastructure upgrade would cost about N98.5 billion.
Speaking about technology upgrades, he noted that the group would change its core banking software.
Agbaje noted, “I said to you, the technology needs to be better, it needs to be robust. So, we’re going to change our core banking software across all regions.”
“I learnt the hard way that changing banking software is just one small thing. You will change the hardware and what is called the enterprise and network infrastructure. So, it involves a bit more than just the software.”
“There’s also a change management cost that you will incur. That is the last thing we’ll do, and it will create a lot of efficiency.”
The group also allocated N133 billion to improve lending to the corporate, commercial, retail, and SME segments. According to Agbaje, this sum has been outlined as working capital for the bank’s operations in these segments.
The total amount to be allocated to GT Bank is N370 billion, which the group will also use to recapitalize GT Bank.
PFA/Asset Management acquisition
From the remaining N30.5 billion of the N400.5 billion capital raise, the group proposes to allocate N22.49 billion towards expanding its other businesses, specifically through acquisitions in its Pension Fund Administration (PFA) and asset management businesses.
Agbaje speaking about GTCO’s other businesses noted, “In terms of the PFA, the new businesses are doing very well. They’re two years old and doing very well, they’re all growing 10x.”
“However, we believe we bought a business that we knew to reach its full potential, it required additional capital for an acquisition. With the new capital, we plan to proceed with this acquisition.”
