Proshare News and Analysis
GT Bank: GDR Listing on the London Stock Exchange
Posted Sunday, July 8, 2007

Guaranty Trust Bank plc, one of Nigeria’s leading financial institutions with subsidiaries in the Gambia, Sierra Leone and Ghana, has announced its intention to conduct an offering of Global Depositary Receipts (GDRs) to be listed on the London Stock Exchange.

It is the Bank’s intention to raise US$750 million in the Global offering, which is the first of its kind to be undertaken by any Nigerian bank on this scale. A third of the offer, amounting to US$250 million, is being offered to Nigerian investors while the balance of US$500 million is available to foreign institutional and individual investors.

J.P. Morgan Securities Limited and Morgan Stanley & Co. International plc are the Joint Bookrunners/Global Co-ordinators/International Underwriters of the GDR Offer, while Afrinvest (West Africa) Limited is the Local Co-ordinator. The members of the Domestic Underwriting Syndicate are Afrinvest (West Africa) Limited, BGL Limited, FBN Capital Limited, First City Monument Bank Plc, Futureview Financial Services Limited, IBTC Chartered Bank Plc, Sterling Capital Markets Limited, Vetiva Capital Management Limited and WSTC Financial Services Limited.

According to Mr. Tayo Aderinokun, Managing Director, Guaranty Trust Bank plc, “the Nigerian tranche of our GDR offering is a unique vehicle aimed at providing Nigerian investors with the opportunity of purchasing a dollar-based international investment. Dividends on GDR holdings will be made in US dollars.

The GDRs are expected to commence trading on the London Stock Exchange within a week of the closing of the Book Building Period.” The GDR price range will be announced on Wednesday 11 July, 2007 and pricing is expected to be announced on Friday 20 July, 2007.

Guaranty Trust Bank’s success in the international capital markets in the last six months is unprecedented in the history of the Nigerian banking sector. The Bank had in January this year issued a $350Million Regulation S Eurobond without the guarantee of either the Federal Government or any international financial institution. Market watchers note that this is the first time since the early 1990s that any Nigerian institution has been this involved in the international capital markets and are expecting these achievements to have a positive impact on the Bank funding/lending capacity.

Currently operating from 104 branches, Guaranty Trust Bank plc is presently rated Triple A (Aaa) by Agusto & Co, the leading domestic rating agency. It is also rated AA- (Double A minus) by Fitch; and BB- (Double B minus) by Standard & Poor’s, the best ratings so assigned by the two international rating agencies to any Nigerian or West African-based bank.

For further details, kindly contact the Communication & External Affairs Manager on Tel: 01-2715227.


http://www.proshareng.com/myproshare/portal_news.php?id=2591

More info:

Although the funds raised is to be denominated in dollars, Nigerian based investors can subscribe in Naira in view of the CBN decision to grant permission to convert such Naira subscriptions into dollar. The minimum that an investor can subscribe is 50GDR at $12-$13 per GDR, meaning that a minimum of about N80,000 is required to invest in the offer.

Interestingly, subscribers will not be subjected to the 3-4 months plus that it takes to receive the shares but will be able to trade their shares almost immediately as investors funds will not be subjected to CBN verification.

Analysts, over to you O!

A Global Depositary Receipt (GDR) is typically a dollar denominated instrument issued in international financial markets through a registered depositary bank. GDRs are negotiable bank certificates, issued by the Depositary Bank and representing ownership of certain equity securities (the Underlying Shares) that are issued and tradable in a local market. These negotiable certificates represent ownership of a certain number of shares of a company and can be listed/traded independently from the Underlying Shares. The issued GDRs are exchanged with the Underlying Shares at a predetermined ratio (for example, 50 shares to 1 GDR).

Quoted from allAfrica.com

This means the GDR`s are fully convertible to shares at your own convenience.Until we know how many shares are exchangeable for this GDR we cannot determine the shares issued (we should have this information by 11.07.07 according to Proshareng.com)

Does anyone know if there's going to be a technical suspension or if that's unnecessary with GDRs? I own quite a few GTB shares and was hoping to "hide" behind the 6 months it takes to issue new certs and the usual post-suspension bull-run. Now it seems the shares are going to be diluted instantly (the degree of dilution is yet to be determined).

To the Gurus  : does this make GTB a buy, hold or sell? Should I eat my loss (as I seem to be doing lately) and move on? Will the listing of GTBs GDRs (say that ten times v. fast) on the LSE put a premium on the share price (not worked so far for Oando)?

GTB's N96bn Public Offer opens today
By Omoh Gabriel, Business Editor
Monday, July 9, 2007
LAGOS — GUARANTY Trust Bank (GTBank) Plc is opening its investment doors today for local and foreign investors to buy into its public offering of N96 billion ($750 million). The offer is a variant from the popular public offering that is well-known to Nigerians. This time, the bank is asking the investing public to buy into its Global Depository Receipts in dollars that is convertible to shares at the instance of the holders of the receipts. The Global Depository Receipts will be listed both on the London Stock Exchange and the Nigerian Stock Exchange.

The foreign component of the offer is giving a total of $500 million (N64 billion) investment opportunity to foreign investors to own part of GTBank while $250 million or N32 billion is being offered to local investors. The offer will close on July 19, 2007.

Officials of the bank at an investors’ forum in Lagos, Friday, said with the offer, the bank shareholders' fund would rise to N150 billion surpassing the $1billion that has become the equity targets of most Nigerian banks. The fund being raised is to be denominated in dollars but local investors can pay in Naira as the CBN has given the bank the permission to convert such Naira subscription into dollar. The minimum that an investor can subscribe is 50GDR at $12 per GDR, meaning that a minimum of N80,000 is required to invest in the offer.

According to GTBank officials, “a Global Depositary Receipt (GDR) is typically a dollar denominated instrument issued in international financial markets through a registered depositary bank. GDRs are negotiable bank certificates, issued by the Depositary Bank and representing ownership of certain equity securities (the Underlying Shares) that are issued and tradable in a local market. These negotiable certificates represent ownership of a certain number of shares of a company and can be listed/traded independently from the Underlying Shares. The issued GDRs are exchanged with the Underlying Shares at a predetermined ratio (for example, 50 shares to 1 GDR).

However, GDRs are entirely fungible with ordinary shares and can be swapped for the Underlying Shares and vice versa. GDRs are typically used for capital raising purposes by companies from emerging markets to access investors in international markets.

J.P. Morgan Securities Limited and Morgan Stanley & Co. International plc are the Joint Bookrunners/Global Co-ordinators/International Underwriters of the GDR Offer, while Afrinvest (West Africa) Limited is the Local Co-ordinator. The members of the Domestic Underwriting Syndicate are Afrinvest (West Africa) Limited, BGL Limited, FBN Capital Limited, First City Monument Bank Plc, Futureview Financial Services Limited, IBTC Chartered Bank Plc, Sterling Capital Markets Limited, Vetiva Capital Management Limited and WSTC Financial Services Limited.

GTBank’s GDR offering is the first ever opportunity for Nigerians to invest in the securities of a Nigerian company listed and traded on the London Stock Exchange (LSE). The offer provides local investors access to a large, global marketplace.


http://odili.net/news/source/2007/jul/9/320.html

GTB's N96bn Public Offer opens today
By Omoh Gabriel, Business Editor
Monday, July 9, 2007

LAGOS — GUARANTY Trust Bank (GTBank) Plc is opening its investment doors today for local and foreign investors to buy into its public offering of N96 billion ($750 million). The offer is a variant from the popular public offering that is well-known to Nigerians. This time, the bank is asking the investing public to buy into its Global Depository Receipts in dollars that is convertible to shares at the instance of the holders of the receipts. The Global Depository Receipts will be listed both on the London Stock Exchange and the Nigerian Stock Exchange.

The foreign component of the offer is giving a total of $500 million (N64 billion) investment opportunity to foreign investors to own part of GTBank while $250 million or N32 billion is being offered to local investors. The offer will close on July 19, 2007.

Officials of the bank at an investors’ forum in Lagos, Friday, said with the offer, the bank shareholders' fund would rise to N150 billion surpassing the $1billion that has become the equity targets of most Nigerian banks. The fund being raised is to be denominated in dollars but local investors can pay in Naira as the CBN has given the bank the permission to convert such Naira subscription into dollar. The minimum that an investor can subscribe is 50GDR at $12 per GDR, meaning that a minimum of N80, 000 is required to invest in the offer.

According to GTBank officials, “a Global Depositary Receipt (GDR) is typically a dollar denominated instrument issued in international financial markets through a registered depositary bank. GDRs are negotiable bank certificates, issued by the Depositary Bank and representing ownership of certain equity securities (the Underlying Shares) that are issued and tradable in a local market. These negotiable certificates represent ownership of a certain number of shares of a company and can be listed/traded independently from the Underlying Shares. The issued GDRs are exchanged with the Underlying Shares at a predetermined ratio (for example, 50 shares to 1 GDR).

However, GDRs are entirely fungible with ordinary shares and can be swapped for the Underlying Shares and vice versa. GDRs are typically used for capital raising purposes by companies from emerging markets to access investors in international markets.

J.P. Morgan Securities Limited and Morgan Stanley & Co. International plc are the Joint Bookrunners/Global Co-ordinators/International Underwriters of the GDR Offer, while Afrinvest (West Africa) Limited is the Local Co-ordinator. The members of the Domestic Underwriting Syndicate are Afrinvest (West Africa) Limited, BGL Limited, FBN Capital Limited, First City Monument Bank Plc, Futureview Financial Services Limited, IBTC Chartered Bank Plc, Sterling Capital Markets Limited, Vetiva Capital Management Limited and WSTC Financial Services Limited.

GTBank’s GDR offering is the first ever opportunity for Nigerians to invest in the securities of a Nigerian company listed and traded on the London Stock Exchange (LSE). The offer provides local investors access to a large, global marketplace.

Panadol Extra,

Could you kindly throw more light on the prospects of this GDR pls? I am eargerly waiting. Cheers

easimoni:

Does anyone know if there's going to be a technical suspension or if that's unnecessary with GDRs? I own quite a few GTB shares and was hoping to "hide" behind the 6 months it takes to issue new certs and the usual post-suspension bull-run. Now it seems the shares are going to be diluted instantly (the degree of dilution is yet to be determined).

To the Gurus   : does this make GTB a buy, hold or sell? Should I eat my loss (as I seem to be doing lately) and move on? Will the listing of GTBs GDRs (say that ten times v. fast) on the LSE put a premium on the share price (not worked so far for Oando)?

Let me make an educated guess there is not going to be any technical suspension because the GDR is dollar denominated both for the foreign and the local component but the sum effect is that divdends(if you are that way inclined) will be paid in dollars so i don't think any foreign investor for example will be waiting for 3-6 months to collect a certificate as such as you can see this is biased towards foreign investors so the short answer is (you may not like this) instant dilution of shares if even if you decide to exchange your  GDR`s for the underlying shares. We will know the extent of dilution by wednesday this week and pricing by 20.07.07.
Having said that you can also by the same token convert your current holding into GDR in which case it will be dollar denominated and trade on the floor of the london stock exchange if you are not interested in waiting for your dollar denominated dividends. I hope the listing will put a premium on the shares on the LSE remember GTB has already got very good credit rating frrom two of the world`s top credit rating agencies so this should make it attractive to foreign investors and hedge/private equity funds. Yo can be sure if the $500m foereign component is mopped on the floor of the foreign exchange this should help drive up the share price with a residual effect on the shares listed on Nigerian Stock exchange but all these are permutations which may right or wrong but at least we havent got long to wait so you might want to hold fire for now and see how things pan out.
`
I`m buying into it by the way and will hold till i know what direction the share price will be taking in the next weeks

seun can you pls delete this thread as it is repetition of the same thread as regards GTB GDR

@ All

It's becoming increasingly technical now.

1. What does the word "dilution" mean? and how will this affect the price of shares ?

2. What factors do we need to consider before we can see this GDR as a must buy or no-go area?

3. What's the exact GDR to Share ratio ( I see the 1 GDR : 50 Shares as ordinary illustration)

4. It is stated that 1 GDR = $12 , and they stated that the minumu is 50 GDR which is 80,000 naira.  Mathematically , this means they base their exchange Rate on $1 = 133.33 naira. So, my question is, If i can raise my Dollar in the black market (which I can still get at 128 or 129 naira), can I pay the dollar directly into GTB for the GDR?

Please & enlighten me

@ MT,
Dilution means listing additional shares without buying a company or adding  a new line of business. If a company had 10B shares (like GTB) and makes N13B (again like GTB), the EPS is N1.3. If they add 5B shares through a PO or GDR (I new to GDRs) the EPS drops to 87k and your PE goes up. You did nothing wrong and now your shares are worth less than before. That is why POs are not always a good idea.

Questions 2 & 3 will become clearer soon.

To question number 4, I think N80k was an approximation. Trust me, a lot of people will be looking into forex to exploit any price mismatches. The investopedia definition of DRs may throw some light.

http://www.investopedia.com/articles/03/091003.asp

@easimoni

Thanks for your reply, but it will interest that u I'm a greenhorn when it comes to share stuff. I picked bits and pieces of what I know now from reading various boks, but I must confess that your "jargons" threw me off balance. Can u pls break it apart for me to understand and send me a weblink where u feel i can learn more.

Thanks

RoughCut:

seun can you please delete this thread as it is repetition of the same thread as regards GTB GDR

You could have , at least, provided a reference to the other thread.

Frank, because you are my guy

https://www.nairaland.com/nigeria/topic-64907.0.html

All, use the link above instead.

Thanks

How does one participate

How can one participate

@MT

Look up this website for further explanations. you can use the dictionary link for definitions. Just navigate thru it, am sure you will find something useful.
www.investopedia.com

easimoni, panadol and others, keep up the good work. Your post on nairaland are really enligthening a lot of people.

frankiriri:

You could have , at least, provided a reference to the other thread.

Sorry my mistake can we all use this thread easimoni has kindly provided again------------->https://www.nairaland.com/nigeria/topic-64907.0.html

There`s no need contributing to the same topic twice on different threads

As an answer to the question of participation raised by frankriri please contact the following underwriters but your subscription will be denominated in dollars so you can expect volatility regarding your returns viz-a-viz the dollar exchange rate to the naira

The Domestic Underwriters and Receiving Agents are(source Proshareng)



Afrinvest (West Africa) Limited

11th-12th Floors, Foreshore Towers

2A Osborne Road,

Ikoyi, Lagos.

Telephone:

234-1-2701680-88

234-1-2695479-81

234-1-2694005

Fax:

234-1-2694392

234-1-2701689

Contact Persons: Onoise Onaghinon and Chichi Ukiwe




BGL Limited

Plot 1061 Abagbon Close.

Off Ologun Abgaje Street. Victoria Island

Lagos.

Telephone:

+234 1 2623 141, 2623 256

+234 1 2672 799, 4610895 – 6

Fax: +234 1 2623 258

Contact Person: Feyi Olusanya




FBN Capital Limited

16, Keffi Steet,

South-west Ikoyi,

Lagos.

Telephone: 234-1-2630819

Contact Persons: Tairat Tijani and Chris Olowojolu




First City Monument Bank plc

Primrose Towers

17, Tinubu Street,

Lagos.

Telephone:

234-1-2641296

234-1-4612616

234-1-4612620

Contact Persons: Bayo Rotimi and Debo Adeosun



Futureview Financial Services Limited

Futureview Plaza

Plot 161D, Audu Taylor Close

Off Idejo Street

Victoria Island, Lagos

Telephone:

234-1-4733570,

234-1-2629856-7

Contact Person: Peter Owunna




IBTC Chartered Bank Plc

IBTC Place

Walter Carrington Crescent,

P.O Box 71707

Victoria Island, Lagos.

Telephone:

234-1-2626520

Contact Persons: Funso Akere, Ngozi Tagbo-Ocheho and Lolade Akinwale




Sterling Capital Markets Limited

20, Marina,

P.M.B. 12933,

Lagos.

Telephone: 234-1-264010-9

Contact Person: Seni Oduwole




Vetiva Capital Management Limited

Plot 266B, Kofo Abayomi Street

Victoria Island

Lagos, Nigeria

Telephone: 234- 1-4617521-3

Fax: 234-1-4617524

Email: info@vetiva.com

Contact Persons: Kolapo Joseph and Segun Opaleye




WSTC Financial Services Limited

28B, Adeola Hopewell Street,

P.O. Box 75519

Victoria Island,

Lagos.

Telephone:

234-1-4618490

234-1-4619989

Contact Person: Yetunde Olumuyiwa

Culled from proshareng

@ All,
found this article on the GTB offer. It states that they are only raising N96B because raising any more will erode thier ROI. I love this bank! Still waiting for news per how many additional shares will be listed if any.

http://www.businessdayonline.com/?c=54&a=14634

2. What factors do we need to consider before we can see this GDR as a must buy or no-go area?

3. What's the exact GDR to Share ratio ( I see the 1 GDR : 50 Shares as ordinary illustration)

4. It is stated that 1 GDR = $12 , and they stated that the minumu is 50 GDR which is 80,000 naira.  Mathematically , this means they base their exchange Rate on $1 = 133.33 naira. So, my question is, If i can raise my Dollar in the black market (which I can still get at 128 or 129 naira), can I pay the dollar directly into GTB for the GDR?

Please & enlighten me

Lest I forget, will csc number (NSE acct number) be useful in the purchase of this share??

@all

Please the questions above are yet to be attended to. Please @ all , im eagerly awaiting your response as time is going oooo

Found an article on Proshare. Looks like GTBank will list an additional 4B shares to support the GDRs and a GDR is = 50 shares

Basic details on the GT Bank GDR.
Posted Friday, July 13, 2007

GTBank is issuing a $750 million GDR. $500 million will be for the international market and $250 million will be for the local Nigerian market;
4 billion ordinary shares of GTBank are being registered with the Nigerian Securities & Exchange Commission to support the GDRs to be issued;
The GTBank GDR is to be listed on the London Stock Exchange as the GDRs have been registered with the United Kingdom Listing Authority;
Each GDR will be backed by 50 ordinary shares of 50 kobo each of GTBank;
As GDR’s are traded in lots of 50, therefore, minimum application for the GDR will 50 GDR’s and additional applications will be in multiples of 50;
GTBank’s international advisers have come up with a valuation range of between $11.20 and $13.00 for each GDR;
The final price (i.e. clearing price) will be determined on 20th July, 2007, when all request will have been received and the subscription level determined;
Potential investors are meant to bid for each GDR within the price range as stated by GTBank’s international advisers;
For successful applicants, the clearing price becomes the actual price to be paid per GDR;
The international road show to market the GDR started on 9th July, 2007 and will end on 20th July, 2007. Accordingly, the GDR is tentatively scheduled to open on 13th July, 2007and close on 19th July, 2007.
The GDRs are fungible i.e. can be converted to shares and vice versa;
Application forms for the GDRs will be ready by Friday, 13th July, 2007;
FCMB has underwritten $50 million worth of the offer.
Interested parties can subscribe through any of the nine underwriters, including First City Monument Bank Plc. CSL Stockbrokers is making arrangements to receive bids orders from potential individual investors outside of Nigeria, through its London representative.
Funds to support a potential investor’s application must be forwarded to FCMB by Wednesday, 18th July, 2007;
Dollars will be available from the CBN at the CBN rate on the transaction date. The local Underwriters have tentatively suggested an exchange rate of US$1:N127.50;
Trading on the GDR will effectively commence the next trading day after allotment on 20th July, 2007. However, there may be a lock-up period of a month for the domestic tranche as the CBN may want to verify funds;

http://www.proshareng.com/myproshare/portal_articles.php?id=1169

TO easimoni and all GURUS in the House

This GDR is getting a bit complicated now and I have some questions :

1. It is now a known fact that 1 GDR = 50 Shares . Now let's lokk at this scenario :,

What happens if thE GDR value dont appreciate in the London Stock Exchange, but the share value appreciates in Nigeria Stock Exchange. If I request my GDR to be converted to share at that time (since it is stated that GDR is fungible), will the GDR still be exchanged at 1 GDR= 50 shares or are they going to work some financial maths out to calculate what my GDR wwill be worth at that time?

2. I thot the GT bank will come with a fixed price for the GDR. To my little understanding, it seems we will just bid for it, submit the form and later pay for the bid, which means our fund can be refunded or approved depending on the bid value that carries the day. Was I right with this assumption or I made mistake somewhere ?

3. It is noted that the offer will close by 20th of July , and up till today, the application form is not out, and they GT bank is already assuming the offer is on. How logical or fair is that ?

Pls contribute cos I want to understand it o

@MT
If you elect to to convert your GDR oldings to the underlying shares it will be exchanged for you at the rate 1GDR=50 and the shares will be quoted at the prevailing underlying share whenever you decide or elect to convert. The price quoted for the GDR is called the bid/offer price and the clearing price is usually a median between the range quoted.Holding the GDR means you are now trading in what is techincally called derivative(you can ask me what that means:-) so there will be a margin or difference between the price at which your GDR is sold or bought which represents your profit bit like buying foreign currency there is selling and buying rate. It is cheaper for you to buy the GDR if you are buying in foreign currency because of the weakness of the dollar against all major currencies dont think this will affect the local holding in nigeria.

Going forward your earnings on the GDR if you elect not to convert to the underlying shares will be dollar denominated therefore you can expect a fall in your returns if you buy in pounds or euros for the simple fact the dollar is at all time low against pound and euros.

@ Roughcut

While I appreciate ur quick response, I must confess that I still found it hard to understand your "share terms/jargons". I would appreciate if if you could really come to my level. You need to use layman term for me to understand. I'm not a dull person, it's just that I'm coming from an entirely different discpline

gtb gdr application form attached

@MT

Let's go again here is an excerpt i found on Independentonlineng.com hope this helps

How Do GDRs work?

GDRs are typically issued in an international financial markets (such as the U.K. or U.S markets), backed by underlying shares that are issued, listed and traded in a local market (such as the Nigeria market). If a Nigerian company issued a GDR, the Underlying Shares will be held in trust by a Nigerian custodian (the "Local Custodian": on behalf of the GDR holders. The Local Custodian will typically be a well respected local financial institution (such as First Bank Custodians).

The Underlying Shares may be existing shares, already listed on the Nigerian Stock Exchange or newly created shares. The Depositary Bank will in turn convert the Underlying Shares into GDRs which may then be listed on an international exchange such as the London Stock Exchange or alternatively can trade over the counter (OTC) and sold to international investors.

At the request of a GDR holder, and for a small fee, the Depositary Bank may convert the GDRs into shares and vice versa. Upon conversion, a GDR holder receives the equivalent number of shares and the GDRs representing those shares are cancelled. The Depositary Bank is also responsible for voting by proxy on behalf of GDR holders, and the shareholder register of the issuer will show the Local Custodian as the owner of the Underlying Shares. Dividend payments are made by the Issuer and remitted to the Depository Bank, who converts the local currency into US dollars, and distributes the funds to the GDR holders,

Holla again if you need to talk about this especially pricing and stuff and by the way im not a finance person i'm into IT i just happen to take interest in these things since i have a vested interest in the health of the nigerian capital market catch my drift?

ITEMS YOU NEED FOR THE GTB GDR OR ANY OTHER GDR OFFERS THAT MIGHT COME DURING THE YEAR.

1. DOMICILLARY ACCOUNT WITH ANY OF THE RECEIVING AGENTS/BROKERS ON THE APPLICATION FORM.
2. APPLICATION FORM

I WILL ATTACH AN ACCOUNT OPENING FORM FOR IBTC CHARTERED BANK IF YOU WANT TO RECEIVE YOUR DIVIDENDS THROUGH THEM.

TAKE CARE AND TRADE CAUTIOUSLY SINCE THEY ARE MANY OFFERS STILL COMING BEFORE THE END OF THE YEAR.

MAKE SURE YOU RESERVE MONEY FOR DANGOTE FLOUR/OBAJANA CEMENT/JAPAUL OIL & MARITIME THOUGH IT'S OPTIONAL

THIS IS ACCOUNT OPENING FORM FOR IBTC CHARTERED BANK.

IF YOU PREFER YOU CAN GO TO ANY BRANCH OF GTBANK TO OBTAIN ONE.

Is it compulsory to have domiciliary account for one to buy this offer ?

egoldman, that's a good question. I went to open a dom account with intercontinental bank, they told me i must run a current account for 6 months, I moved to GTB, they said I must wait for a year. I opened the current account with GT over three weeks ago, they said i can't withdraw or get cheque book till they confirm my referrals and I wonder which century they'll do that.

Please does any one know where i can open dom account sharp sharp without waiting?