The Agricultural Development Bank (ADB) has announced that it has received approval to issue in excess of 39 million ordinary shares to the Ghana Amalgamated Trust (GAT) to raise GH¢127 million in order to help meet its minimum capital requirement.
This is in fulfillment of ADB’s recapitalization of four hundred million cedis required of commercial banks by the Bank of Ghana as at December 2018.
A statement issued by the Ghana Stock Exchange on the transaction said that the announcement follows an approval by the Securities and Exchange Commission on January 2, 2020.
This is also subsequent to shareholders’ approval at ADB’s annual general meeting on August 28, 2019.
The private placement is a transaction tool which is used by companies to raise additional capital for their operations.
Unlike Initial Public Offering, IPOs, which are opened to the general public, the private placements are targeted at specific investors who usually invest huge sums of money.
Per practice, this means that GAT will have representation on the board of directors of ADB who will provide the strategic direction of the bank.
According to the Ghana Stock Exchange, trading of ADB shares will not be suspended during the offer period.
Meanwhile, the timetable for the transaction will span from Friday, January 10, 2020, to Tuesday, January 21, 2020.
The lead manager and sponsoring broker for the offer is Serengeti Capital.
When the process is completed, the total number of ordinary ADB shares in issue will amount to 300,798,407.
Ghana Amalgamated Trust
The Ghana Amalgamated Trust was established by the government to provide funding support to well-run local banks that were unable to meet the BoG’s GH¢400 million minimum capital requirement.
Five banks, Prudential, UMB, NIB, ADB and OmniBSIC are in line to receive various amounts in order to shore up their capital levels to meet the regulator’s approved benchmark.
Ghana Amalgamated Trust, or GAT, will be getting the funds from the finance ministry after dropping a plan to raise the money through a bond sale.
The 2 billion-cedis debt issuance was abandoned after a court case challenging the legality of it soured investment appetite for the securities, they said.
The vehicle was formed in January 2019, to boost the capital base of five local lenders that weren’t shut down as part of the regulator’s efforts to clean up the industry because they were deemed well-managed.