Like my other thread, this thread will, by God's grace usher you into wealth come in 2008. I say AMEN!

The Nigerian Stock Exchange [NSE] trading activities have consistently in recent times been dominated by the Nigerian banks stocks. This trend could be partly attributed to the Central Bank of Nigeria directive which required all universal banks operating in the country to increase their capital to a minimum of N25 Billion Naira with effect from January 2006. In pursuance of the attainment of the policy objective, a number of the banks resorted to the capital market to raise additional capital. Also, with our burgeoning foreign reserves in excess of US$48 billion up for management, banks have sought to shore up their capital base to N100 billion in line with CBN requirements.

Within the period of July 2004 when the policy was enunciated and August 2007, about three years, not less than ten banks have gone to the market to raise additional capital. In fact about six of the banks have either gone to the market twice within that period, or are preparing to return to the market for the second time; while one bank has in fact obtained regulatory approvals to go to the market for the third time within that period. In most of the outings, the banks have reported successful outings evidenced by the large over-subscriptions. As I type this, Zenith is bracing up for about N130 billion expected to be raised next month, bank PHB is on for about N80 billion IPO 9infact the shareholders approved N200 billion IPO – they’re aware of the 33% discount it offers), FCMB just closed, Fidelity is rounding-off, Afri Bank is receiving various boost for its N100 billion offer, Japaul Oil may have been 200% oversubscribed, Access, we heard, is also over subscribed, Dangote Flour IPO was also a success, Oceanic and UBA were also oversubscribed, First Bank was 400% over subscribed (raised N5000 billion but absorbed N250 billion as applications above 10,000 units were turned down), I can go on and on…

The reported successful outings of most of the offers could be attributed to the intense publicity campaign mounted by the banks on the expected gains derivable by the investing public; which also no doubt helped in boosting the awareness and participation of the public in the various offers. The campaigns among other things emphasized the derivable capital appreciation, dividends history of the offering banks, and other mouth watering attractive returns on the investments.

An E.D during the investors’ forum of the Fidelity offer revealed that 4 weeks after allotment, the CSCS will be credited with the shares from its PO – remember, Fidelity sticks to their word. Also note that buying public offer during a period of endless POs is profitable as the secondary arm may witness a downturn during that period. We are expecting Firstinland, Costain WA, Aiico, Wema, Zenith, Diamond GDR is on, and we’re also expecting Union Bank, Skye spring, Unity Bank, Standard Alliance, Staco, Mutual Benefit, the list is inexhaustive.

In order to improve the awareness of investors in bank shares, we highlight some important factors to consider from regulatory perspectives and observed trends before going ahead with their investment decisions:
1. On the average it takes a minimum of a period of about one year for a successful offer to be placed in the market and the shares to be issued to allotted investors. And even after the allotment the dispatch of the share certificates by the respective registrars of the banks could take a minimum of additional six months. With your CSCS Account, maybe within six months since CBN has stopped verifying the proceeds.

2. Prospective investors should not expect to start realizing the benefits of capital gains from the shares through disposal in the secondary market even if you have with you your share certificates. This is because you have to submit the share certificate to your stockbroker, who will have to submit same together with your authorized transfer form to the bank registrar for signature verification. This process could take a minimum of three to eight weeks depending on the efficiency level of the registrar and other factors which may not be disclosed to you.

3. With enforced rules from SEC and CBN, dividend approved by the Central Bank of Nigeria [CBN] for payment may also be forthcoming as soon as declared. However, enabling laws governing publication of bank annual reports require that every bank publishes its annual account not later than four months after the end of the financial year to which the accounts apply; and after obtaining the approval of Central Bank. While banks would strive to attain the publication deadline, the dispatch of the dividend warrant could take another two to three months after publication of the accounts.

4. I reiterate that If you have a Central Securities Clearing System [CSCS] account, the delays outlined above could be minimized.

5. Prospective speculative investors who aspire to reap the benefits of capital appreciation through early disposal of their share holdings will be well advised to buy from the secondary market. The price at the secondary market which will be higher than the price of issue on offer is the price at which the concerned bank is placed on “technical suspension”. During the technical suspension period, the secondary market price will remain unchanged pending the conclusion of the new issue. Notwithstanding, having considered the atmosphere in the capital market right now, I STRONGLY SUGGEST THAT INVESTORS GO FORCELY FOR POs and PRIVATE PLACEMENTs., more of POs due to the market awareness and regulations.


My subsequent postings will X-ray value stocks that will blow your mind in 2008. Watch Out!

THANK YOU.