| Guaranty Trust Bank announces equity capital raising and GDR Listing on the London Stock Exchange |
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ABOUT THE GTBANK GDR TRANSACTION
In July 2007, GTBank became the first Nigerian and African bank to issue a full
listed GDR offering on the London Stock Exchange. The transaction comprised a
2-tranche structure of a simultaneous US$250mm domestic GDR offering and a
US$500mm international offering. The GDRs issued are represented by the
underlying ordinary shares of the Bank with an exchange ratio of 1GDR to 50
ordinary shares. While the domestic GDR offering is no different from the
international GDR offering, this transaction structure was adopted as a means of
ensuring that domestic investors were provided with the opportunity of
participating in this historic offering.
However, given the differences that exists between the Nigerian and
international equity issuance process, one of which is the pricing of primary
securities, the Bank adopted an innovative and unique offering process, with a
view to ensuring that such differences are minimized to a large extent in order
not to frustrate the transaction and completion timeline, while achieving the
above mentioned objectives.
In a typical primary equity offering in Nigeria, a “Fixed Price” approach is
often adopted i.e. investors are advised of a fixed price at which the primary
offering will be made, on the day an offer opens up till the closing date.
However, in international capital markets, a “Book Building” process is often
adopted for the marketing and pricing of primary equity offerings. Book Building
is basically a capital issuance process which aids price and demand discovery.
The Offer price is then determined after the bid closing date.
Consequently, the underwriters of the domestic tranche adopted a Reference Price
of US$12.75 per GDR for the duration of the domestic tranche as a guide for
domestic investors, with the caveat that the offer price to be determined on
July 20 may close at below or above the Reference Price, given the international
market practices. On July 20, 2007, the offer price was fixed at US$11.20 per
GDR.
Following the price determination, all domestic subscriptions were adjusted to
reflect the offer price of US$11.20, whilst taking into consideration the
subscription multiples of a minimum of 50GDRs. For example, a domestic investor
that subscribed for 500GDRs would initially have paid US$6,375 based on the
Reference Price. However, following the adjustment to reflect the official price
of US$11.20 per GDR, the investor would be allotted a total of 550GDRs, while
US$215 will be returned to same as surplus monies. On this note, the domestic
investors to the GDR are required to contact the respective underwriters through
which their investments were made for collection of surplus monies due.
Without a doubt, the recent GTBank GDR issuance in the international financial
markets recorded an unprecedented milestone in the domestic capital markets and
would provide the economy with several multiplier benefits. The growing appetite
for quality equity offerings from the international investing community is also
viewed as a positive signal of the strong underlying prospects of the Nigerian
economy in the short to medium-term. The GTBank GDR currently trades on the
London Stock Exchange under the ticker symbol “GRTB”. We understand that the
Bank will be issuing a secondary market trading guide for the GDRs to domestic
investors in the very near future.
GDR Frequently Asked Questions
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GDR Receiving Agents |
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| Name | Address | Contact Person |
| Afrinvest (West Africa) Limited | 11th-12th Floors, Foreshore Towers 2A Osborne Road, Ikoyi, Lagos. Telephone: 234-1-2701680-88234-1-2695479-81234-1-2694005 |
Onoise Onaghinon Chichi Ukiwe
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| BGL Limited | Plot 1061 Abagbon Close. Off Ologun
Abgaje Street. Victoria Island Lagos Telephone: +234 1 2623 141, 2623 256 +234 1 2672 799, 4610895 |
Feyi Olusanya |
| FBN Capital Limited | 16, Keffi Steet, South-west Ikoyi, Lagos. Telephone: 234-1-2630819 |
Tairat Tijani Chris Olowojolu |
| First City Monument Bank plc |
Primrose Towers 17, Tinubu Street, Lagos Telephone |
Bayo Rotimi Debo Adeosun |
| IBTC Chartered Bank Plc | IBTC Place Walter Carrington Crescent, P.O Box 71707 Victoria Island Lagos. Telephone: 234-1-2626520 |
Funso Akere Ngozi Tagbo-Ocheho |
| Sterling Capital Markets Limited | 20, Marina, P.M.B. 12933, Lagos. Telephone: |
Seni Oduwole |
A Global Depositary Receipt (GDR) is a dollar denominated instrument issued in international financial markets through a registered depositary bank.
It is a negotiable bank certificate, issued by the Depositary Bank and representing ownership of certain equity securities that are issued and traded in a local market.
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Typically, a GDR offering is targeted at international institutional investors seeking access to conveniently structured emerging market equities.
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Although GDRs are typically issued to international investors to afford them flexibility in investing in equities on markets such as the NSE, Nigerian investors may participate in the primary issuance of GDRs in two ways:
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Nigerian investors may participate in the secondary trading of GDRs through an international broker. In this case, the Nigerian investor will be required to set up an independent Euroclear account for custody and settlement of the transaction. The investor may also operate on the back of the Euroclear account of any international broker. This is also possible under current foreign exchange and securities regulation guidelines.
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GDRs are usually quoted and traded in U.S. dollars on the International Order Book (IOB) of the LSE. The IOB is an established and thriving central market supported by a large community of brokers and their clients. The IOB is open to all members of the LSE. Over 260 securities are presently traded on the IOB
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The IOB is the trading platform for GDRs. The IOB is based on an electronic order book with additional functionality to enable member firms display their identity before a trade using named orders. This order-driven trading assures investors that they are getting the best price for the security and that the prices on screen are executable and credible. The IOB offers direct access to securities from 37 countries through one central order book. The IOB offers a high level of transparency and is accessible only to member firms registered with the LSE.
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