Unity bank’s share price fell 9.2 percent to N1.48 as of Tuesday, February 20, according to Bloomberg data amid speculation of an impending acquisition by US-based private equity firm, Milost Global inc.
Milost Global is said to be in Nigeria to close the acquisition of tier-two lender Unity bank plc, two sources familiar with the matter confirmed to BusinessDay.
Milost admits plans of acquiring a “large bank” in a press statement on its website but no bank was named. The bank is reported to have 250 branches. Unity bank has some 240 branches across Nigeria.
“A deal is in the works for Unity bank and a due diligence process is ongoing,” a source told BusinessDay on condition of anonymity.
If a deal goes through for Unity, it would be the third investment made by Milost in 2018 alone, following the acquisition of luxury real estate player, Primewaterview
limited for $1.1 billion (N396 billion) and a $350 million facility for maritime services firm, Japaul Oil.
Unity bank has a market capitalisation of N17.8 billion and its one-year return of 78 percent is among the top three banks with the highest return in the period.
The bank’s net income in the three months through September 2017 was N352 million.
According to its full-year 2016 financial report, Unity’s shareholding structure is dominated by bad bank, Asset Management Corporation of Nigeria (AMCON) which owns 4.02 billion shares and accounts for 34.42 percent of total outstanding shares.
Pan African Capital Nominee holds 1.48 billion shares, which works out to 12.67 percent, while Thomas Etuh, IBAD Limited, and EL-Amin Ltd hold 1.05 billion, 717.7 million and 615.88 million shares respectively. Their holdings work out to 9.01 percent, 6.14 percent and 5.54 percent of total outstanding shares.
Most financial and investment analysts believe that Nigerian banks would have to shore up their capital base this year, which could result in increased rights issue, IPO, mergers and acquisitions.
Nigerian banks have been battling with the problem of huge Non-Performing Loans (NPLs) occasioned by Nigeria’s first economic recession in a quarter of a century.
However, things have started to look up since the country’s exit from recession in the second quarter of 2017, a rally in oil prices and improved dollar liquidity.
The NPL ratio of deposit money banks stood at 15.18 percent as at September 2017 from 10.13 in December 2016, while their loans and advances declined by 1.3 percent to N15.9 trillion in September 2017 from N16.1 trillion in December 2016, data made available by the Nigeria Deposit Insurance Corporation (NDIC) indicated.
According to its website, Milost says the purpose of its African tour among other things in Nigeria is to meet up with the management of our portfolio companies to discuss concluded deals and other current transactions among those includes the closing of a large Nigerian bank acquisition which was previously announced.
Milost last year announced a $255 million financing term sheet for capital Bank of Mongolia Ltd and Soyombo Insurance Ltd, their sister company, the financing is expected to be comprised of $55 million in equity capital and $200 million in debt.