The Securities and Exchange Commission (SEC) has approved extension of time for Sovereign Trust Insurance (STI) ongoing rights Issue.
The SEC granted the insurance company additional three weeks, moving the initial closing date from February 20, to Friday, March 13.
STI is anticipating to raise N1.15 billion in new equity funds from existing shareholders through a rights issue of 2.29 billion ordinary shares of 50 kobo each at the nominal price of 50 kobo per share.
The shares were pre-allotted to prequalified shareholders on the basis of one new ordinary share for every three ordinary shares held as at the closure of register for the rights issue.
The net proceeds of the rights issue would be used to finance the insurance company’s five-year blueprint.
The blueprint is expected to reinforce the company’s competiveness’ in the Nigerian market, including its market share.
Several companies are turning to existing shareholders to raise funds as the primary public offer market remains largely inactive.
Access Bank had last week extended the acceptance period for its ongoing rights issue of N52.6 billion.
SEC approved the extension of Access Bank Plc’s rights issue by two weeks to March 18. Access Bank is offering 7.63 billion ordinary shares of 50 kobo each to existing shareholders at N6.90 per share.
The rights issue, which opened on January 26, was initially scheduled to close on March 4.
The bank stated that the extension of the acceptance period was done to give shareholders ample time to subscribe for their rights.
The management of the bank urged shareholders to take advantage of the extension to pick up their rights.
It is expected that trading on both rights issues of Access Bank and STI will continue on the Nigerian Stock Exchange (NSE) all through the extended period.
Majority and retails shareholders in several quoted companies have been using rights issue to bridge equity financing gaps and reduce dependence on bank loans by injecting their own funds into their companies.
Against the background of the in investors’ apathy and deteriorating pricing trend at the capital market, several core investors that hold the decisive votes on the success of recapitalisation of quoted companies have opted for rights issue, which allows existing shareholders to recapitalise their companies.
Rights issue gives the first right of refusal to existing shareholders and thus preserve existing shareholding structure. It, however, provides window for new investors to buy into the company through rights trading on the secondary market.
Market analysts said the growing list of rights issues early this year underscores the preparedness of core investors to refinance their companies as well as the undervaluation of several companies at the stock market.
According to analysts, rights issue implies significant financial commitment by the core investors.