NCB issues $5 billion APO
Published:Friday | April 26, 2024 | 10:58 AM
The NCB Financial Group plans to raise $5 billion in its additional public offer (APO) with the option to upsize to $7.5 billion.
“NCB Financial has placed considerable and deliberate focus on 'future-proofing' its businesses and in most instances, the enabling strategies require some degree of patient capital,” stated chairman Micheal Lee-Chin in the prospectus.
The new capital would provide a buffer to adopt new capital requirements, deal with loss absorption, and enable plans for financial technology adoption.
The prospectus added: “We intend to use the net proceeds from this Invitation to support a part of our deliberate plan to reallocate capital with a focus on reducing debt and bolstering the capital in the NCB Financial Group. This APO is one of multiple strategies that the NCB Financial Group is pursuing to reallocate capital,” stated the company in its prospectus.
The group plans to issue 78.5 million new ordinary shares at $65 with the option to upsize that to 117.75 million units.
Also, within that quantum are 785,000 employee-reserved shares at $58.50.
The board approved plans for an APO on September 8, 2023 in which it could offer up to 300 million additional shares or 12 per cent of its existing 2.54 billion units.
Management previously stated that it could offer more than one APO, to achieve the full 300 million units.
Since the start of the pandemic, NCB's debt levels moved from double its capital to triple its capital.
As context, banks and other institutions prefer clients to have debt levels not exceeding their capital.
Thus the APO is an attempt to reduce its relative debt load.
Specifically, the group's debt, excluding customer deposits, stands at $591 billion or three times its consolidated capital at $196 billion to December 2023.
Contrast that with December 2019, when NCB's debt stood at $388 billion or nearly twice its capital at $190 billion.
The pandemic led to a reset across the financial world, which was aggravated by spike in global interest rates.
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