The majority shareholding of the National Investment Bank Limited (NIB) is set to shift significantly from the state to the government-backed Ghana Amalgamated Trust Limited (GAT) between now and 2024. This follows aonfirmation that the Trust will be
confirmation that the Trust will be propping up the 56-year-old bank with some GH¢1.2 billion.
The amount, which is more than half of the GH¢2 billion GAT financing programmed for NIB and four other indigenous banks, is enough to virtually wipe off the share capital of existing shareholders, thereby, shifting the tide in favour of the special purpose vehicle (SPV).
The government, through the Ministry of Finance, currently owns more than 97 per cent of NIB, leaving the remainder to private investors.
In a February 17 interview, the Managing Director of GAT, Mr Eric Mr Otoo, however, told the GRAPHIC BUSINESS that although the trust planned to inject between GH¢1.1 billion and GH¢1.2 billion into NIB, it was yet to determine the corresponding stake that the SPV would own in the bank as part of the five-year arrangement.
That piece of information, he said, could only be arrived at after an ongoing due diligence had been completed.
“That analysis is being done but it has to be taken into context, the overall total assets and the value of NIB and I do not have those figures until that analysis is done,” Mr Otoo said.
He added that NIB's situation required that it was given special attention.
Valuation of NIB
An investment banker with more than 20 years’ experience, Mr Michael Cobblah, said in a separate interview that the planned GH¢1.2 billion capital injection “will obviously dilute the existing shareholding significantly.”
“Even if they (existing shareholders) have GH¢100 million share capital now, it will be a certain per centage of the GH¢1.2 billion,” Mr Cobblah, who heads C-Nergy Ghana, said.
He, however, wondered why the current shareholders of NIB have not conducted a valuation of the bank to arrive at its worth prior to GAT coming in.
He explained that the valuation, which would have arrived at the seller’s price, would have given NIB and its shareholders the value of the bank to enable them to use that to negotiate the amount to be invested and the equivalent equity.
“I will be surprised if NIB will just agree to whatever value that GAT will give to them.”
“Valuation is different from what is on the face of the balance sheet. Even if they are making consistently losses over the years, you have to know that they have been in the system for a long time. They a brand and all those things will have to be factored into the valuation,” he said.
Although a threat to government’s hold on the bank, GAT’s planned assumption of a controlling interest in NIB over the next five years means that the trust will have absolute control of the bank to be able to properly implement its decisions, another investment banker and Chief Executive Officer of Crescendo Consults, Mrs Doris Ahiati, said in a separate interview.
Ms Ahiati said a controlling stake in NIB should give extra comfort to GAT and its arrangement to help recapitalise and reinvigorate growth in the bank.
“Usually, that should augur well for efficiency, operations and resource management internally to achieve whatever goal they have set for themselves.”
“It is like having a big brother looking over your shoulder,” she said on February 18.
“But this is not a gentle or slow kind of big brother; this is the kind of big brother who is under pressure from itself to recoup the investment they are putting in,” she added.
On the benefits, she said she expected a GAT control of NIB to “translate into cultural, attitudinal, operational, structural and policy changes.”
NIB capital deficit
Meanwhile, although Mr Otoo said GAT intended to inject GH¢1.2 billion into NIB, the GRAPHIC BUSINESS was reliably informed that the bank required a minimum of GH¢1.4 billion to cross Bank of Ghana’s GH¢400 million capital threshold.
The paper understands that the bank’s capital deficit prior to the auditing of its 2018 financials showed a capital deficit in excess of GH¢850 million.
However, following losses recorded in the 2018 financial year, it is understood that the deficit now requires a capital injection of GH¢1.4 billion for NIB to be compliant with the central bank’s minimum capital requirement.
GAT was established in December 17 as an SPV to pool funds from pension and mutual funds to invest in five banks, which are loosely described as well-governed but undercapitalised indigenous banks.
Per the arrangement, the trust is expected to exit after five years through a sale on the Ghana Stock Exchange, buy out by existing shareholders or direct sale to other investors.
The other four beneficiary banks are the Agricultural Development Bank, Omni/BSIC Bank, Universal Merchant Bank and Prudential Bank.
The trust commenced a roadshow on February 17 to raise GH¢750 million as the first tranche GH¢2 billion bond.