…Union Bank of Nigeria sets to divest from UK subsidiary***
Investors at the Nigerian equities market on Tuesday lost N90 billion dropping further by 0.59 per cent, as bearish stance continued.
The All-Share Index (ASI), which opened at 29,552.99, lost 174.36 points or 0.59 per cent to 29,378.6; while the market capitalisation lost N90 billion or 0.59 per cent to close at N15.132 trillion compared with N15.222 trillion achieved on Monday.
The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are: Total, Flour Mills, Guaranty Trust Bank, Stanbic IBTC Holdings and GlaxoSmithKline Consumer.
Commenting on the market performance, Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., attributed the mixed performance to profit taking.
“We expect the mixed performance to continue in the midst of profit-taking and positioning by investors taking advantage of the pullbacks,” Omordion said.
He said that some players were still interpreting and analysing the impact of the recent Cash Reserve Ratio adjustment, ahead of the full-year earnings reporting season.
According to him, this is also against the backdrop that capital wave in the financial market may change in the midst of the unstable economic outlook for 2020.
Market breadth closed negative, with nine gainers versus 23 losers.
An analysis of the price movement chart shows that Associated Bus Company led the losers’ chart in percentage terms, dropping by 9.76 per cent to close at 37k per share.
GlaxoSmithKline followed with a decline of 9.17 per cent to close at N5.45, while Eterna shed 8.77 per cent to close at N2.60 per share.
Total Nigeria dipped 8.55 per cent to close at N107, while Honeywell Flour Mills decreased by 6.78 per cent to close at N1.10 per share.
Conversely, Julius Berger recorded the highest price in percentage to lead the gainers’ table, gaining 9.93 per cent to close at N22.15 per share.
NAHCO came second with a gain of 9.67 per cent to close at N2.95, while Linkage Assurance appreciated by 9.62 per cent to close at 57k per share.
NEM Insurance rose by 9.09 per cent to close at N2.40, while Vitafoam Nigeria appreciated by 3.77 per cent to close at N5.50 per share.
Similarly, the total volume of shares traded declined by 43.49 per cent as investors bought and sold 250.93 million shares worth N4.83 billion exchanged in 4,561 deals.
This was in contrast with a turnover of 444.04 million shares valued at N3.35 billion exchanged in 4,306 deals on Monday.
Transactions in the shares of Stanbic IBTC Holdings topped the activity chart having accounted for 43.04 million shares valued at N1.79 billion.
Zenith Bank trailed with 34.29 million shares worth N724.08 million, while United Bank for Africa traded 18.57 million shares valued at N151.43 million.
Fidelity Bank sold 17.63 million shares worth N37.83 million, while Guaranty Trust Bank transacted 15.12 million shares valued at N467.87 million.
In the meantime, the Union Bank of Nigeria (UBN) Plc has entered a share sale and purchase agreement to divest 100 per cent of its equity stake in Union Bank UK Plc (UBUK).
The bank said this in a statement by its Company Secretary, Somuyiwa Sonubi, posted on the Nigerian Stock Exchange (NSE) website on Tuesday.
It said that the sale aligned with Union Bank’s strategy to geographically streamline its business operations to focus on growth opportunities in Nigeria.
“Following a competitive bid process, MBU BidCo Limited (“MBU”), an acquisition vehicle wholly owned by MBU Capital Limited (“MBU Capital”), was selected as the preferred bidder,” read the statement.
It noted that the completion of the sale was subject to regulatory approvals from the relevant regulatory authorities in Nigeria and the United Kingdom.
Commenting on the planned divestment, Mr Emeka Emuwa, the bank’s Chief Executive Officer, was quoted in the statement as saying that it would enable the bank to focus on long-term opportunities.
“As the banking landscape shifts towards digital and agency banking to drive financial inclusion, the Nigerian market presents robust long-term opportunities for Union Bank.
“This divestment allows us channel our focus and capital towards mining those opportunities fully.
“Through the sale, we are better positioned to deliver greater value to the organisation and its stakeholders as well as continue to build the future of banking in Nigeria.
“The terms of the sale of UBUK delivers substantial value to our shareholders, while also entrusting its customers and trading partners to a high-quality financial services institution who will work with existing management to deliver a stronger and more profitable entity,” Emuwa said.
Also, Mr Mohammed Iqbal, Founder and Chief Executive Officer, MBU Capital, said the development was a delight.
“We are delighted to announce the acquisition of Union Bank UK, subject to regulatory approval.
“We see a huge opportunity to build on UBUK’s strengths in international markets to create a new-style bank which is focused on the needs of UK and international SMEs and entrepreneurs.
“Many of these customers are seeking a bank which truly understands the needs of entrepreneurial, fast-growing businesses.
“We believe that our acquisition and vision for UBUK offers the potential for significant growth for the bank.
“We look forward to working with our new colleagues at UBUK to continue to service the needs of its clients.
“We also look forward to sustaining and deepening relationships with UBUK’s existing trading partners,” Iqbal stated.
The Chapel Hill Denham Advisory Limited acted as Financial Advisers, while White & Case LLP and Udo Udoma & Belo-Osagie acted as UK Legal Advisers and Nigeria Legal Advisers respectively to UBN.
Syndeo Capital Limited (led by Mandeep Ahluwalia) acted as Advisers to MBU Capital with Akin Gump LLP as Legal Advisers and PwC as Financial and Tax Advisers.