By Alex C
Renaissance Capital (RenCap), a financial solution firm, has recommended Diamond Bank’s rights issue to qualifying investors citing the bank’s steady rising growth that the firm says makes Diamond bank the potential next tier 1 bank.
Details of the rights issue, expected to open on 30 July and close 26 August, was released by Diamond Bank on 13 June, 2014. The bank is looking to issue 8,685,145,863 ordinary shares of 50 kobo each at N5.80 per share with which it plans to raise N50.4billion ($310million) to improve its capital adequacy ratio and support business growth.
RenCap described the shares issue as “a step in the right direction” by Diamond (bank) which it called the fastest-growing Nigerian bank over the past three years. “(we) recommend qualifying investors should take up their (the bank’s) rights” the financial services firm said.
Diamond bank grew total assets by 155 percent between FY10 and FY13 and is now the largest tier 2 bank by assets with a 6.1 percent market share, vs 3.7 percent in FY10, and potentially the next tier 1 bank, according to RenCap research.
The firm applauded the bank for such impressive growth despite its capital constraints and recording two consecutive years of 23 percent RoE in FY12 and FY13. “What this bank needs at this stage in its cycle is capital to support the next phase of its strategic growth plan, in our view” RenCap added.
Renaissance Capital is a leading emerging and frontier markets investment bank with operations in Russia, Central and Eastern Europe, Asia and Africa.