Zenith Bank Nigeria Plc having released its 2016 financial year result, followed by release of information on its intention to raise fresh N100 billion capital, continues to trigger market reactions.
Findings showed that mixed reactions have followed the release of two vital information from the bank expected to guide investment decisions by shareholders and prospective investors.
While the market reacted sharply with buoyant buy mandate on the bank’s shares which triggered over 10 per cent rise on its equity price on the result release date, the trend changes shortly as the fund raising information filtered to the market and the praise gains evaporated via increased offer mandate.
However, a retail investor and Chairman Standard Shareholders Association of Nigeria, Mr. Godwin Anono stated that the bank offering dividend and also declaring its intention to raise fresh capital has been the tradition seen in the market “ giving with one hand and taking with the other”
He however gave thumbs high for the bank for its sustained dividend policy, saying that the proposed intention by the bank to raise funds will succeed, because of its pedigree in rewarding investors.
“The offer will succeed, because they have been consistent in paying dividend. The chances of the offer scaling through is high”
He said that because of the confidence investors have in the bank, if they chose to raise the fresh funds from bond, rights or secondary market, investors will subscribe because they have maintained a credible pedigree which usually drive investment decisions.
Meanwhile, a Lagos based stock broker, Paul Ezum, reacting to the development said that the two announcements from the bank almost at the same time impacted on its equity pricing.
He said that when the bank’s result was released, people believed that the bank did very well and that there is the need for them to take position in the bank, others however felt that the time for them to offload has come and they used that opportunity to sell while many others placed buy mandates.
He noted that as news that the bank wants to raise N100 billion fresh capital filtered in, cross section of investors started feeling otherwise.
According to him, some of the investors who have started buying the shares either to reap from expected price gain, based on the heard action that will follow dividend proposal, realized that the announcement of intention to raise fresh capital after paying dividend may affect pricing, started pulling back.
Recall that Zenith Bank opened trading on Tuesday February 28 2017 at N14.80 and later rose to Nn15.40 per share the same day, but, when the news of raising N100 billion hit the market, the bank’s equity price started declining and as the close of trade on Thursday March 2 2017, the bank’s equity price closed at N13.90 per share.