Union Bank Seeks Shareholders’ Approval to Raise $750 million

Union Bank, a leading Nigerian bank, has revealed that it would seek shareholders’ approval to raise $750 million in June, funds it says would be used to boost lending to the power, telecom and oil sectors.  A statement by Reuters explained, “Union Bank has ramped up lending to key sectors which requires large foreign currency funding.”

Union Bank, formerly known as colonial bank, said it was not looking to raise fund from equity as it has an excess in shareholder’s fund of N183.1 billion ($1.13 billion). Rather funds will be sourced through a medium term debt instrument.  The Bank is one of the oldest banks in Nigeria with over 50 years presence.  Its primary focus is on retail and investment banking, with diversified interest in insurance, securities, investments, real estate and financial management services.  It is ranked the 14th largest bank in Africa.

Key Growth Frontiers

Lending to the Power, Oil and Telecom sectors is rapidly becoming an emerging trend in Nigeria’s banking industry with all three sectors considered key growth frontiers and major contributors to GDP.  Last month, Nigeria’s fourth largest bank, Access Bank received shareholder’s approval to secure a $1 billion facility which will be poured into developing a portfolio of investment funding focused on the three listed markets.

A Mckinsey report, released at the World Economic Forum on Africa, identified telecommunication, oil and power, amongst others, as key contributors to GDP growth in 2013.  Telecom and Oil contributed a combined 16 percent to GDP growth last year.  The bank controls a healthy portfolio of continental and overseas interests including branches in the Republic of Benin and the United Kingdom.

Union’s planned investment in these growth-driver sectors will position the bank as a leading lender for international investors and consolidate its position as a genuine contender for Nigeria’s banking market share.

Source: Ventures Africa