Otedola Consolidates Banking Exposure
Billionaire investor Femi Otedola has significantly increased his concentration in FBN Holdings (FirstHoldco), spending N222.21 billion ($160 million) of his personal, non-leveraged funds. This transaction involved the acquisition of 1.7 billion shares, raising his total holdings from 10.1 billion to 11.9 billion shares. His total equity valuation in the financial institution now stands at N1.4 trillion, lifting his overall stake value from $1.07 billion to $1.08 billion.
This aggressive consolidation comes as Otedola reportedly streamlined his investment portfolio. He has exited his position in Geregu Power PLC to focus heavily on FirstHoldco, creating a highly concentrated exposure in the banking giant.
FirstHoldco Overtakes Competitors in Market Valuation
Following the heavy buying activity, FirstHoldco's market capitalization surged to N5.7 trillion, overtaking Zenith Bank's N5.2 trillion and GTCO's N4.8 trillion to become the most valuable bank on the exchange. The bank's share price recorded a 165% year-on-year gain, climbing to N127 from N47.9.
With his current positioning, Otedola is close to triggering the Securities and Exchange Commission's 30% mandatory take-over bid rule. To reach the threshold of 13.5 billion shares out of the total 45.5 billion outstanding shares, he requires an additional acquisition of shares to trigger an offer for the remaining portion.
Earnings Performance Backs Stock Rally
While some market critics attribute the stock rally to a tight float situation, FirstHoldco's financial performance provides strong fundamental backing. The group posted a pre-tax profit of N653.5 billion for the first six months of the year, marking an 83.5% growth compared to N356.15 billion recorded in the corresponding period of the previous year.
The bank's second-quarter pre-tax profit rose by 95%, driving its earnings per share (EPS) to N8.86, compared to Zenith Bank's N7.64. FirstHoldco's trailing 12-month EPS stood at N25.37, a massive recovery from the N1.09 recorded last year when the bank was weighed down by heavy impairment charges.
However, from a valuation perspective, FirstHoldco's price-to-earnings (PE) ratio ranges between 10.1x and 14.4x. This makes peer banks like GTCO at 5.44x and Zenith Bank at 4.5x relatively cheaper options for long-term value investors.
