UBA plans to raise fresh capital

The United Bank for Africa is planning to raise capital through a private placement and a rights issue to help support large-ticket lending in infrastructure and agriculture sectors in the Nigerian economy, the bank said on Monday. Reuters reported that UBA, the third-largest lender by total assets in Nigeria, did not disclose how much it intended to raise and said it had yet to finalise the pricing of the issue.We are going to do a private placement as well as a rights issue, the Managing Director, UBA Capital Holdings,Mr. Victor Osadolor, said.In terms of pricing, we have not finalised on it yet, he told a conference call.UBA currently trades at about N3.15 per share on the Nigerian bourse but Osadolor said the market price did not reflect the fundamentals of the bank which he expected should be trading at around N8.He said the rights issue, which would be launched at a discount to market price, would take place after the private placement and that the bank aimed to hold enough capital to cover its deposit liabilities while creating risk assets.Osadolor said UBA had a capital adequacy ratio of 20 per cent and achieved deposit growth rates of 20 per cent in the nine months to September. He said the bank would create loans without breaching the regulators limits on a banks exposure to a single borrower.The capital itself will enable us lend a lot of the deposits we are generating, Osadolor said.Last October, UBA raised about N20bn via a bond issue to bolster capital and help increase lending.Meanwhile, activities on the shares of UBA and three other banks listed on the Nigerian Stock Exchange boosted trading in the banking sub-sector. The three other Deposit Money Banks are Zenith Bank Plc, First Bank of Nigeria Plc and Guaranty Trust Bank Plc.Trading in the shares of the four banks made the banking sub-sector to lead activities at the close of business on Monday.The management of the NSE had in July released financials of UBA for the half year ended June 30, 2011, showing that gross earnings of the bank fell by N5.993bn or 6.39 per cent to N87.663bn from N93.656bn in the preceding half year.It had stated that profit before tax rose by N1.475bn or 17.07 per cent to N10.111bn from N8.636bn in 2010; while profit after tax improved by N3.269bn or 67.44 per cent to N8.116bn, compared with the previous N4.847bn.
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