Diamond Bank Plc will utilize proceeds from its N50bn rights issues for branch expansion and upgrade of its technology among others.
The Chief Executive Officer, Dr. Alex Otti, stated this while addressing shareholders shortly after the bank’s rights issue offer.
A statement by the bank disclosed that Otti told the shareholders that a large portion of the proceeds from the issue would be deployed into branch network expansion and renovation, information technology upgrade and up-scaling of the retail segment of its operations.
According to him, the bank intends to expand its branch network to 350 from the current 257.
Following this projection, more than 80 per cent of the money raised will be injected into the expansion.
A part of the funds will be channelled towards strengthening its competitive capacity in the middle market by developing and sharpening its strategic focus, especially in the area of Small and Medium Enterprises, sole proprietorship and the corporate business sector.
Otti said, “The retail end of the market is very important to us, therefore, we will be investing 86 per cent, which is about N42bn in that area while development of IT infrastructure will consume about four per cent and the remainder will be a part of the working capital. We do understand that to remain competitive, we must think and work ahead.”
The statement quoted some of the shareholders as saying that the move by the bank to raise fresh capital was commendable, especially as the management had maintained stable growth and profitability in the last three years.
The bank is issuing 8,685,145,863 ordinary shares of 50 Kobo each, which will be sold to existing shareholders whose names appear on the registrar of members and transfer books of the bank at the close of trading on Friday, June 13, at N5.80k. The stocks will be allocated on the basis of three ordinary shares for every five held.
The shares are payable in full on acceptance and tradable on the floor of the Exchange throughout the period of the issue. The acceptance list opened since Wednesday, July 30, 2014 and will close on Tuesday, August 26, 2014.
It quoted a shareholder, Mr. Murhi Ojo, as saying, “The management of the bank has performed very well. We have the confidence that the money that will be realised will be prudently used and make more profit for the shareholders. It is a welcome idea and to me, the timing is right.”
The bank had posted a first half profit after tax of N13.8bn as against the N12.6bn in the same period of 2013.
