11 listed firms raise over N2.2tr in one year to boost balance sheets

In a year marked by economic uncertainty, inflation and foreign exchange crisis, 11 listed firms approached the Nigerian Exchange Limited (NGX) to raise N2.2 trillion in fresh capital.

According to data from the NGX, the 11 listed firms are Japaul Gold, VFG Group, Wema Bank and Jaiz Bank, Nigerian Breweries and International Breweries. Others are Notore Chemical Industries, Ella Lakes, Tantalizer, Royal Exchange and Sovereign Trust Assurance.

While the nine opted for additional capital to plug FX losses, boost balance sheets and expand operations, the banks sought to meet the Central Bank of Nigeria (CBN) minimum requirement for the recapitalisation.

Operators argued that the massive fundraising effort, driven by the need to counterbalance shrinking revenues and surging expenses, highlights the deep challenges businesses faced in maintaining financial stability and competitiveness in a harsh operating environment.

Since the beginning of 2023, the foreign exchange crisis has put the naira on a downward trend causing quoted companies under the fast-moving consumer goods (FMCG) to record huge losses.

This approach also emphasises the firms’ strategic efforts to survive and adapt, underscoring the capital market’s role as a pivotal tool for navigating economic headwinds.

A breakdown of the capital raising showed that Japaul Gold and Ventures Plc completed additional capital raising to the tune of N20 billion. The transaction was aimed at reinforcing the primary business of the company as a mining-focused enterprise and repositioning it as a market leader in the mining sector.

VFG Group also successfully raised about N12.5 billion in equity from its shareholders to strengthen its balance sheet for its long-term investment targets.

Chairman, VFD Group Plc, Mr. Olatunde Busari, at a meeting, outlined the group’s strategic growth plan to its shareholders with a commitment that the group would consolidate on existing businesses and seek cross-border opportunities to drive growth in the years ahead.

Wema Bank had, in July, concluded the first tranche of its recapitalisation exercise having secured all relevant regulatory approvals for the allotment of its N40 billion rights issue, which was initiated in December 2023.

Jaiz Bank successfully listed N10.04 billion from its private placement on the Nigerian Exchange Group (NGX), following regulatory approvals from the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC) and NGX. The milestone, the bank said in a statement, placed it among the few banks that have already met the CBN’s revised capital requirements, ahead of the June 2026 deadline.

Nigerian Breweries, in the year, completed the raising of N599.1 billion via rights issue. The company offered 22.607 billion ordinary shares at 50k each, priced at N26.50 per share to existing shareholders.

International Breweries opened its N588 billion rights issue programme on May 21, issuing 161,172,395,100 new ordinary shares of 2 kobo each at an offer price of N3.65 per share. The company revealed that the net proceeds from the rights issue would be used to settle its outstanding U.S. dollar-denominated loan and provide working capital support.

Notore Chemical Industries raised additional capital of N105.79 billion through a private placement. The capital raising was facilitated through the issuance of 2,418,099,300 ordinary shares valued at 50k each at N43 per share.

Also, Ella Lake raised an additional N2.90 billion in capital through a rights issue. The company offered a rights issue of 1,000,000,000 ordinary shares of 50 Kobo each at N2.90 per share, which brought the total value of the capital to N2.90 billion.

Tantalizers successfully raised an estimated N1.07 billion through a private placement, as the fast-food chain continues its restructuring plans. Royal Exchange embarked on an N1.56 billion rights issue from its shareholders to boost its operations. The funds, however, represented three-quarters of the entire N2.06 billion sought by the group under the rights issue.

According to the operators, despite achieving strong operational performance in 2024, many listed firms on the NGX faced significant setbacks due to the sharp devaluation of the naira and a persistent foreign exchange crisis.

The macroeconomic challenges eroded profit margins, increased operating costs, and dampened the impact of otherwise robust business activities, underscoring the fragile balance between operational efficiency and external economic pressures.

For instance, Dangote Group’s three listed companies – Dangote Sugar Refinery, National Salt Company of Nigeria (NASCON) and Dangote Cement – incurred combined foreign exchange (FX) losses of close to N400 billion in half-year (HI).

The FX losses were based on the devaluation of the naira to N1,500. These companies also suffered FX losses at the end of 2023 operations when the naira was devalued to N913.

A breakdown of the figures showed that Dangote Sugar incurred FX losses of N193.7 billion in the first half of 2024, representing an increase of 133 per cent when compared to the N83.1 billion it suffered in the corresponding period in 2023.

The company posted accrued revenue of N295.6 billion, reflecting a 46 per cent higher than the N202.8 billion revenue recorded in H1 2023.
However, it posted a pre-tax loss of N104.6 billion in the second quarter, compared to the N49.9 billion pre-tax loss posted in 2023.

President of the Ibadan zone Shareholders Association of Nigeria, Eric Akinduro, said the high rate of inflation and other macroeconomic issues are affecting the firms.

“FX challenge is a major factor impacting negatively on the profitability of the companies. This is why the government should prioritise creating an enabling environment for these firms to operate.

“Majorly, recapitalisation is necessary to present very robust and stronger companies, but the enabling environment is not there,” he lamented.
Vice President of Highcap Securities, David Adonri, said the equity capital raising transactions through the Primary market of NGX were largely successful last year.

“The market is also poised to perform better this year as investors’ confidence in Nigeria increases. The primary market complemented the secondary market last year as a viable investment outlet.

“That was a great relief to companies seeking capital raising following the doldrums that greeted the market since the global meltdown of 2008,” he said.