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Concerns as Femi Otedola offloads 834 million shares of FBN Holdings

One of Nigeria’s most respected bank holding companies, FBN Holdings announced its largest single shareholder Femi Otedola has sold down about 834 million shares of FBN Holdings in a deal valued at about N9.28 billion only.

The transactions were reported by FBN Holdings as part of its  Insider Dealing notification to the exchange, a mandatory filing required to be disclosed whenever a significant shareholder is selling shares. Nairametrics first reported the back-to-back sales on Friday, June 3rd, and Monday, June 6th, 2022. with 274 million and 600 million respectively. 

According to the series of filings posted on the website of the Nigerian Exchange, Mr. Otedola and his entities sold about 834,939,764.00 units representing about 30% of his shareholdings in the bank holding company. The sale also reduces his shareholding from about 7.57% to about 5.24%, thus 2.3% of the bank shares have been sold in a matter of 3 days.

The sale comes after a protracted board room tussle over who owns the largest shares of the company. The confusion culminated in several press releases by the bank forcing the Nigerian Exchange to wade in and clarify the issues. The latest audited accounts of the banks placed the billionaire at 7.57% of the ownership of the bank.

It is also unclear who is buying the shares from him (Otedola), however, transactions like this are often acquired by institutional investors or similar billionaires like Mr. Otedola with deep pockets.

Investors Worry about the sale

The latest sale is befuddling to most investors who wonder why the billionaire is selling when he should have been buying thus, arousing suspicion that he may be exiting the bank.

  • Traders who spoke to Nairametrics on the condition of anonymity expressed concern about the sale fearing that it could impact the valuation of the bank that has just experienced its best price rally in years.
  • FBH Holding’s share price has risen from about N6 to over N12 when it was revealed that the billionaire investor was mopping up shares of the bank triggering a scramble.
  • The share price has also traded within the N11-N12 range since Otedola was declared the majority shareholder this year.
  • An early exit after just recently being declared majority shareholder will likely swirl speculation about the causative reasons.
  • A source with knowledge of the transaction who spoke to Nairametrics fears this might be a signal that there is still uncertainty about the bank’s ownership and may have triggered the sale.

What this means for investors

A potential exit of Mr. Otedola from FBN Holdings could impact the shares of the company positively or negatively depending on how it is perceived by institutional investors

  • However, an exit that suggests there are challenges within the bank could negatively affect the share price of the company especially if a comment by Mr. Otedola indicates this was the case.
  • FBN Holding’s share price fell by 3.11% on Wednesday dropping to N10.9 or below N11 at the close of business on Tuesday.
  • The test for the company share price will likely occur over the next few days starting from tomorrow as most investors only new about the sale this evening.
  • There might also be more pressure on the stock if Mr. Otedola sells further later in the week.

……This is a developing story

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