Last week’s acquisition of the single largest individual equity stake in FBN Holdings Plc by Mr. Oba Otudeko’s Barbican Capital Limited is in a state of technical suspension until the Central Bank of Nigeria (CBN) determines its propriety.
Multiple sources yesterday said the apex bank would subject the material acquisition to scrutiny in line with the apex bank’s “fit and proper” rules. Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), and Nigerian Exchange (NGX) also traditionally review material transaction such as Barbican Capital’s acquisition.
FBN Holdings at the weekend confirmed that Barbican Capital, an affiliate of Otudeko’s Honeywell Group Limited, had acquired about 4.77 billion ordinary shares in the holding group, representing 13.3 per cent of the group’s 35.9 billion issued shares.
Rule 4.1 of the Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria stipulates that where shares amounting to five per cent of a holding company are acquired through the secondary market, such holding company shall apply for approval from the CBN within seven days of the acquisition.
Extant capital market rules also required formal disclosure and review of material shareholding of five per cent and above by the regulatory authorities.
Sources at the CBN said while the apex bank cannot obstruct investors from trading in banks’ shares in line with the “free entry, free exit” principle of the capital market, the prerogative is on the apex bank to ensure that only fit and proper persons have significant influences on banks’ management and control.
According to a source, the CBN will still need to screen and decide to either approve or reject the Barbican Capital’s acquisition in line with the apex bank’s vetting rules.
The source noted that in approving, CBN will look at several criteria, including source or sources of fund, the “fit and proper” review of the main beneficial owner to check whether his or her level of credibility is without question, and review of any previous or existing regulatory concerns.
Barbican Capital, incorporated in March 2023, has Otudeko’s children – Oyeleye Foluke and Otudeko Obafemi Adedamola, as main owners. CBN’s rules on “lifting of veil of beneficial owners” however allow the apex bank to trace the sources of funding for the acquisition in determining the beneficial owner of the deal.
Another source said the apex bank has all the information it needs about Otudeko, as a former long-standing director of FBN Holdings.
“It was on the basis of these information that the apex bank took previous actions regarding Otudeko’s involvement with the bank,” the source said, referring to the exit of Otudeko from the bank.
“All that needs to be established is whether he can now pass the ‘fit and proper persons’ of the apex bank,” the source added.
A leading investment banker said the regulatory review of material shareholding of five per cent and above is a routine procedure, which the buyer and the relevant parties are well acquainted with.
“It is a normal procedure for regulators to mandate investors that acquire up to five per cent and more of a listed company to file some essential documents for review. Upon review, they may ask for additional information or request that a director steps down from the board,” the source said.
The emergence of Otudeko as the single largest individual shareholder has again intensified the boardroom intrigues for the control of Nigeria’s oldest surviving banking group, after Lagos businessman, Mr. Femi Otedola, upstaged existing directors to become the single largest individual shareholder in 2021.
Market analysts said the direction of the governance structure at FBN Holdings going forward will be determined by the final approval of the apex bank and the ability of the major shareholders to couple together controlling majority stake to run the affairs of the bank.
With no outstanding majority shareholder, FBNH has been ran by a longstanding, time-tested traditional alliance of several shareholders with major shareholdings, who traditionally pool their holdings through proxies to sway major decisions, including board and management appointments.
Other major shareholders of the banking group include Otedola, with nine per cent; Hassan Odukale, with seven per cent; Dr Mike Adenuga Jr, with seven per cent and Saheed Arisekola, who holds five per cent equity stake.
