Sovereign Trust Insurance (STI) Plc has embarked on raising new equity funds of N1.421 billion through rights issue from its existing shareholders.
The company is issuing 2.841 billion ordinary shares of 50 kobo each on the basis of one new ordinary share for every existing four shares held at N0.50 per share. The offer, which opened on July 6, 2023, is expected to close on August 14, 2023.
STI stated that the proceeds of the rights issue will be used for business expansion and to meet working capital requirements, saying, after the deduction of estimated issue costs and expense of N40.243 million, representing 2.83 per cent of the gross issue proceeds, the proceeds will be used for development of retail products, enhancement of investment portfolio, working capital and offer expenses.
The chairman of STI, Oluseun Ajayi stated that, the shareholders agreed that the company should raise additional equity capital up to the maximum limit of the authorized share capital, whether by way of a special placement, public offer, rights issue or a combination of any of them, saying, the board met, and in line with the strategic objective of the company, resolved to raise capital via a rights issue.
He said that the rights issue will not only give the company a competitive edge, but it also provides an opportunity for the insurer to expand its share of the market in the ever-competitive Nigerian insurance industry that has seen the entrance of a few global players in recent years.
Ajayi further said, the capital raising exercise is in line with the company’s goal of being a dominant player in the insurance industry, with market leadership positions in the sectors it participates.
He added that, “as we look ahead, the Board is of the considered opinion that the fresh injection of the net proceeds of N1.38 billion would expand the company’s business operations, competitiveness and also increase its penetration of the insurance market.
“It is the privilege of the Board of Directors to serve with a view to building shareholder value over the long term, and to encourage all shareholders to participate fully in this rights issue.”
