REGULATORS have come under heavy criticisms for failing to fully disclose the buyer of 10.43 billion shares of FirstHoldco in a transaction valued at at N323.4 billion.
A so-called mystery buyer, which was reported earlier as Mr Femi Otedola, had purchased the shares of Mr Oba Otudeko and Mr Tunde Hassan-Odukale, two former majority shareholders of First Bank last on July 16.
The transaction was estimated to have raised Mr Otedola’s stake in FirstHoldco to 36.7 percent. Ina web of confusion, however, the Nigerian government and First Holdco denied involvement in the purchase, saying they were not involved in the transaction.
But they admitted that the purchase transaction was made by RC Investments Management Limited, a trustee in the transaction, linked to Mr Babatunde Samuel Sule. Economy Post first broke the story that Mr Sule is the chief executive office of Rennaisance Capital (RenCap).
READ ALSO: In billion-naira puzzle, Nigerian govt, Otedola say not buyers of 10.43bn First Bank stocks
Mr Sule-linked RC Investment bought nearly 7.787 billion shares from Barbican Capital and RAML, owned by Mr Otudeko, on Wednesday.
The firm also bought 2.647 billion shares from firms linked to Mr Hassan-Odukale such as Leadway Holdings, Leadway Pensure PFA, Haskal Holdings, and Leadway/NNPC Staff Pension Investment.
SEC surprise query to CBN
On Wednesday, however, the Securities and Exchange Commission (SEC) queried the Central Bank of Nigeria ( CBN) over the transaction. Two days later, SEC released a statement saying it granted a ‘no objection’ to the First Holdco off-market deal that occurred on July 16.
The market regulator said it conducted a comprehensive review in line with existing laws and regulatory requirements, noting that there were no subsequent requests for additional information. It explained that the CBN made no further inquiries after the transaction was concluded.
SEC said it remained “firmly committed to its mandate of regulating a fair, orderly, and efficient market; protecting investors; and fostering capital formation in Nigeria.”
However, neither SEC nor the CBN has revealed who the real buyer is.
What the law says
ThE laws on beneficial ownership stipulate that any person or entity acquiring 5 percent or more of a listed company’s shares (directly or indirectly) must be disclosed.” The disclosure must include: identity of the beneficial owner, shareholding category (e.g., director, substantial shareholder, insider), and whether the holding is direct or via a trustee/nominee.
The FirstHoldco 10.43 billion share transaction amounts to 24 percent stake in the company – far higher than 5 percent share.
The laws, as stipulated in Banks and Other Financial Institutions Act (BOFIA) 2020, further say that any person or entity acquiring 5 percent or more of the shares in a bank or bank holding company must obtain prior written approval from the CBN. Also, acquisitions made through nominees, proxies, trustees, or other indirect structures all fall under this provision. The transaction falls short of these laws.
Knocks on CBN, SEC
Experts have criticised the CBN, the SEC, FirstHoldco and the Nigerian government for deliberately witholding the identity of the buyer, wondering what the parties are hiding from the public.
READ ALSO: First Bank: How Otedola bought Otudeko, Hassan-Odukale’s 10.43bn shares, raised stake to 37%
A stock market trader, Mr Joshua Kibiye, said: “If First Bank and the Federal Government are denying involvement, can they now reveal the identity or identities of the person or people who bought the shares? There are several persons or entities who should know who bought the shares:SEC, First Bank or First Holdco, Central Securities Clearing System (CSIS), CBN and even security agencies like the State Security Service (SSS).”
Even though Mr Kibiye entertained doubts about their denials, he said that such revelation of buyers’ identities was needed to entrench transparency and probity in the NGX.
A financial analyst and CEO of Ordinary Men’s Investment Limited, Dr Babajide Oguntola, knocked the CBN for refusing to provide full disclosure on the buyer.
“FirstHoldco is a limited liability company with shareholders, depositors and other stakeholders. So, why would the CBN, the SEC and other relevant parties pretend that they do not know who the real buyer is? Some of us read your reports and others in the public space and we know what might have transpired, but how can the organs of the Nigerian government collude to hide the truth from the public about a company with several shareholders, depositors, investors and other stakeholders? That is lack of transparency.”
