Infinity Trust Mortgage Bank to raise N50bn as shareholders back recapitalisation
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Shareholders of Infinity Trust Mortgage Bank have approved a N50bn capital raise that can be executed through a rights issue, private placement or public offer, as the mortgage lender positions itself for expected sector capital rules.
Infinity Trust Mortgage Bank Plc is to raise N50 billion in fresh capital after shareholders unanimously approved the proposal at an extraordinary general meeting in Abuja, the bank's chairman Nkechi Bibilari said. The raise, described as N50 billion "or its equivalent", will be pursued through one or a combination of a rights issue to existing shareholders, a private placement to strategic investors and an offer for subscription to the public.
Shareholders authorised the board to increase the company's issued share capital to accommodate the new capital base and to amend its memorandum and articles of association, and approved the issuance, allotment and listing of the new ordinary shares on the Nigerian Exchange Limited. The new shares will rank equally with existing ordinary shares. Holders also approved converting 600 million preference shares of N1 each, valued at N600 million, into ordinary shares.
Managing director Luqman Bakare said the exercise is meant to position the lender for opportunities opened by the federal government's target of building a US$1 trillion economy by 2030. He argued that the mortgage banking sub-sector remains small relative to the rest of the financial system, noting that the microfinance segment, despite its many operators, is now somewhat larger than the mortgage sub-sector.
Bakare linked the timing to the Central Bank of Nigeria's recapitalisation of deposit money banks, which lifted minimum capital to N200 billion for banks with national authorisation and N500 billion for those with international authorisation, and said the industry has been waiting to see whether similar thresholds would be imposed on mortgage banks. "While that is still being awaited, we felt the need to rise to that challenge," he said.
The bank expects the capital to remove the constraints imposed by its current size, allow it to expand its mortgage business and improve returns for shareholders, including minority investors. "When you look at the outlook, it supports the need for expansion, so that Infinity is not left behind," Bakare said.