Low Share Price Threatens Mutual Benefits Assurance’s N2b Rights Issue

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  • Low Share Price Threatens Mutual Benefits Assurance’s N2b Rights Issue

Trading in shares of Mutual Benefits Assurance Plc opens today at the Nigerian Stock Exchange (NSE) at 37 kobo ‑ 26 per cent below the insurance company’s rights issue price of 50 kobo, which also opens today. The company has traded within a high of 50 kobo and a low of 24 kobo in the past 12 months.

The company is opening application list for a rights issue of N2 billion as part of efforts to increase its capital base. It is offering 4.0 billion ordinary shares of 50 kobo each to existing shareholders at 50 kobo per share. The rights issue has been provisionally allotted on the basis of one new ordinary share of 50 kobo each for every two ordinary shares held as at the close of business on November 1, 2017.

Application list for the rights issue will close on Friday, September 14, 2018. Both the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) had earlier approved the supplementary offer.

Market analysts said minority retail investors might find the secondary market more attractive, given the double-digit discount to the offer price. However, major investors will need to pick their rights to avoid share dilution and retain the current shareholding structure.

Shareholders of the insurance company had at an Extraordinary General Meeting in Ibadan, Oyo State on June 27, 2018 approved the recapitalization plan. Mutual Benefits Assurance has an authorised share capital of N10 billion and a paid up capital of N4 billion.

The company had, last year, started implementation of a five-year strategic plan aimed at repositioning it for future opportunities and challenges.

The five-year plan focused on four key areas of the group’s business including deepening market penetration and customer acquisition, customer service delivery excellence, transformation of its people and culture and operational effectiveness.

Its Chairman, Dr. Akin Ogunbiyi, said the net proceeds of the rights issue would be used to finance the company’s growth plan including provision of additional working capital and expansion of information and communication technologies to support the company enlarged operations.

He said the strategic goal of the company is to become the number one insurance company in Nigeria in terms of growth and profitability.

He said new investments in technologies would help the company to eliminate delay in its processing and focus more on customer satisfaction.

Mutual Benefits Assurance’s bouquet of insurance products include aviation, oil and gas, marine cargo and hull business and other non-life insurance underwriting, including motor, fire and special perils, goods-in-transit, engineering insurance and retail insurance.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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