Zenith Bank Sells Off N2.3billion Private Shares

A confidential report on the transactions indicated nine deals were struck at the weekend to transfer 210 million shares of the bank.

According to the report, the deals were done through the off-market, negotiated cross deals window of the Exchange and as such were not subjected to the dynamics of price discovery for the particular period. Off-market trade implied that the deals were sealed outside the floor of the NSE.

The negotiated cross deal platform of the Exchange is a special-purpose trading platform that is meant for voluminous transaction. By the cross deal, it implies that the buyer and the seller had been prearranged and the transfer at the stock market was a mere perfection of the agreement between the two. The negotiated cross deal allows the parties to the deal to close the deal at reduced cost.

In the first tranche of four deals, 120 million shares were crossed at N11. The deals were negotiated cross deal between, CSL Stockbrokers Limited and Stanbic IBTC Stockbrokers Ltd, which sold to Fortress Capital Ltd.

In the second tranche of five deals, a total of 90 million shares were crossed at N11 as negotiated cross deals between Stanbic IBTC Stockbrokers Ltd, CSL Stockbrokers Limited and Fortress Capital Ltd.

The negotiated cross deal price of N11 represents a discount of 14.3 per cent to Zenith Bank’s current market price of N12.83 per share at the NSE.

Zenith Bank, NSE’s second most capitalised bank and the fifth most capitalised quoted company, has been under selling pressure as investors reappraise banking stocks. Zenith Bank’s share price has dropped by 8.68 per cent so far this year.

Exotix Partners LLP, a global finance and investment firm, has said 2016 could be challenging for Nigerian banks citing further downside risks materialising with the continued fall in oil prices and foreign exchange uncertainties.

The report titled “Nigerian Financials: Oil prices and FX constraints pressure metrics”, was signed off by Nashwa Saleh, a chartered financial analyst and director, head of financials credit research, Exotix Partners LLP.

“We expect both banks’ asset quality metrics and foreign exchange liquidity to be negatively impacted,” Exotix stated.