Guaranty Trust Holding Company Plc made history last Thursday by becoming the first West African financial institution to have its shares listed on the London Stock Exchange.
The development also made GTCO to become dual-listed on the LSE and the Nigerian Exchange Limited.
Speaking during a post-listing media chat in London, the Group Chief Executive Officer of GTCO, Segun Agbaje, explained that the transition from GDRs to a full LSE share listing is a strategic recalibration aimed at unlocking access to global capital and attracting long-term institutional investors. Excerpts by OLUWAKEMI ABIMBOLA

What does the GDR delisting mean to GTCO and international investors?

With the dual listing, the GDR is now listed on the secondary market like the new shares. It means that anytime you want to raise capital, you can come back to the LSE.

So, we have created another platform for you to raise capital, whether it’s for your business in Nigeria or for a business group. That’s why I call it the best of both worlds, where you have Nigerian Exchange Limited, and now you have LSE.

I want to thank the London Stock Exchange. I want to thank everybody who has joined us today. It always reminds me that it is never an easy road. It’s always the right road that gets you where you’re going. I think, for my board and all those who have been with me, one of the most important things to us is always to play by the rules. Tell it like it is, and then we will live with whatever the outcome is.

What motivated the financial institution to consider this route?

We have to unlock Nigeria and unlock Africa. And so, we have. In my opinion, it was time to test whether the macro story of Nigeria has changed or whether you could go out and raise money in the international market. It is always good to have options.

So, if you ever need capital, if you want to raise it outside of Nigeria. Do you want to raise it in Nigeria? So, if you have growth plans, you’ve given yourself more options.

What is your response to the current valuation on NGX?

 I think we still have a long way to go in terms of finding the right valuations, and if you look at the valuations of most companies in Nigeria, they’re trading below book or just above book. So, for discerning people, Nigeria is actually a pretty cheap place to shop at the moment in terms of what you can buy. You have companies that are doing over 30 per cent ROE, trading at book or below book value.

What was the strategy behind raising capital from the local and international markets, as most banks were raising capital from the local market?

The structure of how we raise capital in Nigeria is quite elongated. So, one, we realised that you couldn’t bring in the internationals (investors) in any great number into that structure. But we are a Nigerian institution with over 50 per cent retail base. So, we didn’t want to dilute that retail base and not give them a chance to do the capital raise.

So, we decided that we were going to do our first phase to that retail base and raise as much capital as we could from them, and then the rest, we would raise internationally. So, we did the best we could, and we raised N209bn.

It gave us a difference of about N150bn to get to N500bn. And so, we started the journey, really immediately; we finished that transaction to do this one. If you feel your stock is overvalued, then you want to sell more, but if you feel your stock is undervalued, you will have to raise capital, and you will want to sell less.

What is your anticipated returns now that the group has different shareholders.?

A lot of our Nigerian retail shareholders judge us more on dividends. So, we’re now going to work on two parameters. I think that every Nigerian company should try and pay at least a 15 per cent dividend yield when you look at the rate of inflation.

So, we’re going to keep that as a parameter. I think when you look at some of the volatility in the macros, you’ve got to do at least a 25 per cent ROE at the minimum. So, that means that by doing this deal now, we’re going to be managing, hopefully, a dividend yield of about 15 per cent ROE expectations for retail Nigerians and a 25 per cent minimum for foreign institutions.

With the listing on the LSE, any potential acquisition outside Nigeria?

You know, we are very conservative. Honestly, diversification is happening without a lot of noise. Nigeria today is really only about 67 per cent of our profit. West Africa is 27 per cent. We’re going to try and push East Africa from the 1.5 per cent it is, and the UK is 1.8 per cent.

We will go to Senegal. I mean, that’s our first point of call. So, outside Nigeria will become more important for sure. Our non-banking subsidiaries are up around 1.4 -1.5 per cent, and they’re barely three years old.

So, we will gain some traction there. So, you are right. But more than anything else, part of what we would do with the capital outside of Nigeria is increase the branch network in those countries, because we are clearly on the ground there. And by doing that, we’ll deepen the business. I’m not so sure you need to be in 30 or 35 countries. I think you need to be in Africa today, maybe even in about 15 countries, and be dominant. There’s no point in going into 30 countries, and you’re a small player everywhere.

What you will see us do with this capital is come up with a strategy to become more dominant and become top five in every country, and that will be our aspiration.

Any plans to be in USA and Asia?

You know, we’re still trying to digest the UK which is probably contributing 1.8 per cent to our profit. I think ultimately, probably the Far East will be a place to look at more than the US. It is more attractive to us than the US market, especially for trade.

How challenging was meeting the governance and regulatory requirements of the LSE, and what were the takeaways for GTCO?

It’s very challenging. I mean, I can’t tell you the thresholds you have to meet. You have to meet the FCA, which is the financial regulator of the LSE. I think, honestly, the takeaway is that you have to learn how to play by the rules because you’ll be surprised how much pops up.

The other takeaway, which I pray we understand in Nigeria, is that we’ve got to use media a bit more responsibly, because when you do due diligence on a company, everything that has been said about that company or the individuals pops up, and you will have to defend them, but people don’t see that. You will have to debunk and confirm, and you will have to explain. It tells you that you can scale if you live your life well, and you can value it.

What options do you recommend for the banking sector forbearance policy of the CBN?

First of all, I don’t think forbearance or the exit should have come as a surprise to banks. We all had a letter that said it would end in 2025; therefore, we should have exited by the end of 2024. So, whatever the regulator has chosen to do should not have come as a surprise. We were given more than enough time to adhere, and that is really my position on forbearance.

How is CRR with the CBN impacting business in scaling up profitability?

I think CRR is a result of a liquidity overhang that was inherited by this government and the CBN. You will have to find a methodical way of getting rid of their liquidity. My belief is that as the CBN sees normalised liquidity, they will reduce CRR over time, but I don’t think it’s realistic to expect them to just release CRR in the midst of what is a large liquidity overhang, which was inherited.