Traders Welcome First Holdco Shares Selloff

The Nigerian stock market operators have welcomed the exit of longtime shareholder Oba Otudeko from First Holdco, expressing optimism that this is the first step to bringing stability to the troubled bank after years of shareholder fighting.

This is as First Holdco Plc shares soared nearly 10 per cent on Thursday, riding a frenzy of activity sparked by the dramatic exit of longtime shareholder Oba Otudeko, whose multi-billion-naira selloff triggered a shift in the bank’s ownership structure.

The company, yesterday, traded a volume of 86.415 million shares valued at N3.045 billion.
Recall that on Wednesday, the Nigerian Exchange witnessed a landmark off-market transaction, with 10.43 billion shares—equivalent to about 25 per cent of the group’s outstanding shares—traded in 17 negotiated deals at a fixed price of N31 per share. The cumulative value of the deal reached N323 billion, one of the largest in recent memory on the Lagos bourse.

Market analysts suggest the transactions have cleared the way for Femi Otedola, already First Holdco’s chairman and largest individual shareholder, to consolidate his position and direct the next phase of the bank’s evolution.

The market believed that these acquisitions were the first step to bringing stability to the troubled bank after years of shareholder fighting.

The vice president Highcap Securities Limited, David Adnori stated the recent significant market transaction involving 10.4 billion units of shares, indicating a major divestment by one investor and acquisition by another.

He said there are speculations that Femi Otedola is the beneficiary of this transaction, particularly in light of earlier reports suggesting that Oba Otudeko is planning to divest their holdings in First Bank to Otedola.

He noted that this consolidation of ownership could potentially alleviate boardroom tensions that have previously hindered the bank’s stability, saying that “if Otedola assumes sole ownership, it might eliminate some elements of crisis within the bank, leading to improved stability and allowing him to implement firm control over the board and company policies.”

He however said sole ownership also introduces concentration risk, as it removes other investors who could provide checks and balances to Otedola’s potential policies.

Adonri emphasised that the future success of the bank now rests significantly on Otedola’s ability to lead and manage the board effectively.

The managing director/ chief executive officer of APT Securities and Funds Limited, Garba Kurfi added that the discussion revolves around a transaction facilitated by Cardinal Securities and First Securities, characterised as a negotiated deal that both parties; buyer and seller are aware of and have concluded on the trading floor.

He added that “rumors suggest that parties like Oba Otudeko and others want to exit their positions, a move that is not unexpected given the dynamics between First Bank and these entities over the past two years.

“The transaction is framed within the context of typical practices in developed markets, where large-scale transactions, including acquisitions and mergers, are common.”

Kurfi emphasised that “such buyouts can be beneficial for banks, as they allow current stakeholders to exit if they are uncomfortable, while opening the door for new investors who can potentially add value.”

“First Bank is now positioned on the right side of history. The transaction gives them the breathing room to tidy up their capital position, and given their legacy as the oldest bank in the country, they are in a strong position to outpace younger banks in the recapitalisation race,” said Boniface Okezie, National Coordinator of the Progressive Shareholders Association.