Otedola’s N222bn First HoldCo Buy Signals Strong Outlook – Analysts

The chairman of First Holdco Plc, Femi Otedola’s latest N222.20 billion investment in the Company has been described by market analysts as a strong vote of confidence in the financial services group’s transformation strategy and future earnings potential.

According to a regulatory filing submitted to the Nigerian Exchange (NGX), the chairman acquired an additional 1.77 billion ordinary shares through his investment vehicle, Calvados Global Services Limited. The purchase raised his total holding to 11.77 billion shares, equivalent to 25.87 per cent of the company’s issued share capital.

The deal comes barely a week after Otedola bought 706.13 million shares worth N77.58 billion on July 22, underscoring what analysts call an aggressive accumulation strategy.

Otedola is now just 4.13 percentage points below the 30 per cent ownership threshold under Nigeria’s Investments and Securities Act (ISA) and Securities and Exchange Commission (SEC) Rules on takeovers.

Market analysts said the sustained buying sends a clear signal about the board’s outlook for the group and its flagship subsidiary, ‘FirstBank’.

The managing director and CEO of APT Securities and Funds Limited, Mallah Garuba Kurfi said chairman-led investments typically reassure other shareholders.

“When a chairman invests in the company, it instils a sense of assurance among shareholders, as the chairman’s involvement in management means he has a clear understanding of the company’s prospects. This positive action encourages others to retain their shares,” Kurfi noted.

The managing director of Globalview Capital Limited, Aruna Kebira, also linked the purchases to improvements in FirstBank’s fundamentals.

“The recent acquisition of shares demonstrates a growing confidence in the bank’s future. Observing FirstBank’s progress, it is clear they are making strides in recovering from non-performing loans.

The commitment to distributing 60 per cent of their profit after tax as dividends each year signals a reassuring direction for investors,” Kebira said.

He added that the investments reflect a belief in FirstBank’s potential to become a leading stock, similar to other blue-chip names, as market conditions improve.

Otedola’s accumulation has coincided with a dramatic re-rating of First HoldCo on the NGX. The company has become Nigeria’s most valuable banking stock by market capitalisation following an exceptional rally. The stock has appreciated by over 120 per cent in the past month.

Attention is also shifting to shareholder returns after the board indicated it has adopted a policy of distributing at least 60 per cent of profit after tax as annual dividends, subject to regulatory approvals.

Analysts said this could boost appeal among institutional and retail investors seeking both capital appreciation and income.

With the 30 per cent takeover threshold now in sight, analysts noted that the next few weeks will be critical in determining whether Otedola makes a final push for control or consolidates his current position.