Authorities at the Nigerian Stock Exchange (NSE) have given the nod to Sovereign Trust Insurance Plc to proceed with its new capital raising exercise. Sovereign Trust Insurance is seeking to raise N2.09 billion from existing shareholders as the insurance company seeks to beef up its capital base to place it in better stead for large-ticket transactions.
A circular obtained yesterday by The Nation indicated that the Quotation Committee of the Exchange has approved the N2.085 billion rights issue, paving the way for the insurance company to round off the pre-offer process and open acceptance list for the rights issue.
Under the rights issue, Sovereign Trust will issue 4.17 billion ordinary shares of 50 kobo each at offer price of 50 per share. As rights, the new shares to be issued have been pre-allotted on the basis of one new share for every two ordinary shares held as at the close of business on January 15, 2019.
Shareholders of Sovereign Trust had recently approved a new capital raising plan for the insurance company, on the heels of the cancelled tier-based minimum solvency capital policy proposed by the National Insurance Commission (NAICOM).
Shareholders authorised the board of the company to create 5.0 billion new ordinary shares of 50 kobo each to increase its authorised share capital to N10 billion of 20.0 billion ordinary shares of 50 kobo each. Shareholders also approved the proposal to raise “additional equity capital for the company up to the maximum of the authorised share capital” with additional mandate to the board to absorb excess money in the event of oversubscription of the initial offer.
Under its capital raising plan, Sovereign Trust could raise funds by issuing new shares to existing shareholders, new general retail investors, existing and new strategic investors or a combination of many means of capital raising.
While NAICOM has cancelled the new tier-based capitalisation programme, market analysts believed that many insurance companies that had launched emergency capital raising plans may go ahead with their plans as proactive measures. Many analysts expected a considerable consolidation of the Nigerian insurance sector, with capitalisation as a major benchmark.