What looks like a dilution of corporate governance in Diamond Bank Plc emerged within the weekend as shareholders began to dissect the seeming return of family control in the bank.
We can now reveal that, with the acquisition of the shares of Actis in the bank(14.79 per cent), and the assumption of all the unsubscribed shares of the bank in the just concluded rights offer which was undersubscribed, the wife has 5 per cent as well as its original holdings (5.86 per cent), Kunoch may be cruising to a level where its holdings would offer it the opportunity to over-run the bank with its own policies as well as imposing its own executive management with its over-all holdings inching to 30 per cent, making it the only bank with the largest single family investment interest since the banking sector consolidation.
This new development will pave the way for the appointment of Uzoma Dozie, one of the members of the owner-family, to mount the saddle as the CEO, a position he was to occupy earlier but his normination was rejected by Actis when its former CEO, Emeka Onwuka left the bank.
Actis rejection was possible because of the block of shares it held . With over 30 per cent shares, Kunoch owned and run by the Pascal Dozie's sons can now vote in one of them to run the bank and the family can now take a decision before any board meeting. They can also afford to have two to three representatives on the board of the bank.
However, with the just concluded right issue of the bank, which closed on 26 August 2014, reactions have being coming from various sections of the bank's shareholders, with worries over the anticipated effect of the current structure of the bank and the proper usage of the fund realized from the right issue.
Business World Intelligence gathered that on the 25th August, 2014 the management of Diamond Bank Plc officially notified the Nigerian Stock Exchange that Kunoch Holdings (“Kunoch”) has successfully completed the purchase of Actis DB Holdings Limited, a company which holds Diamond Bank shares, from Actis LLP and CDC Group Plc. Actis DB Holdings Limited (“Actis DB”) currently holds 14.79% of the issued share capital of Diamond Bank. Kunoch Holdings is a family business, which is launched by the Dozie family and headed by the family giant Pascal G. Dozie. Pascal is the founder and former Chairman/Chief Executive officer of Diamond Bank Plc. He is currently the Chairman of MTN Nigeria and a founding partner of Africa Capital Alliance a private equity fund manager. Chikezie and Kelechi Dozie, both children of Pascal, are directors in Kunoch Holdings.
The poor performance of Diamonds Bank rights issue which targets to raise N50.3bn has triggered calls for extension of the rights.
Our findings revealed that many retail investors could not take their rights, as they expressed concern over the rights offer price of N5.80, which they maintained was not in tandem with the bank's contemporaries in the market. Cross section of retail investors expressed concern that irrespective of the offer price which the bank explained was profitable, there remains the probability that the bank
shares could drop below the rights offer price, shortly after closure and listing of the new shares.
Mr. Gbadebo, a retail investor told our reporter that he could not take his rights because he expects that developments in the bank's post rights issue could lead to further slide in its equity price, as such would offer him better price to buy more of the bank's shares.
A retail investor in the Nigerian capital market told reporter on condition of anonymity that he is watching developments in the bank with keen interest as the recent pull-out by Actis DB Holdings Ltd, former majority shareholders in the bank and replacement by Kunoch, smacks elements of underlying developments with some strings of emerging corporate governance issues .
He added that Kunoch, which acquired 14.79 percent stake in Diamond Bank, previously held Actis DB Holdings Ltd, had prior to the recent acquisition remained an unknown name in investment and fund management parlance, as drivers of the company remained relatively unknown
Dr. Alex Otti Group Managing Director, Diamond Bank, who has been in the new as Abia State governorship aspirant for 2015 elections, had explained that net proceeds from the rights issue would be applied towards the development of the bank's Information and Communications Technology infrastructure. He said that the fund will also be used as working capital support as well as for the expansion and refurbishment of the bank's business locations.
A successful outcome of the rights issue is expected to improve Diamond Bank's tier 1 capital and position it to seize bigger opportunities in the sector, according to the group managing director.
As its former CEO has finally taken to politics, investors are watching the trend of the bank's succession plan. Few weeks ago, the bank denied that its CEO, Alex Otti may have decided to join the long queue to the Abia Stte Government House only to make a U-turn few days ago, indicating some contradictions within the executive management of the bank.
Our sources are of the opinion that too many things are happening to the bank at the same time which need to be cleared so as to offer the investors some level of comfort while holding their shares. Otti's stroll into politics and Kunoch's take-over of the bank are believed to have been to the disadvantage of the bank as both developments lacked transparency. Since 2008, Diamond Bank Plc has remained within the top 10 Nigerian banks when rated in assets and bankers believe that the bank can do better .However, the current developments offers a good number of its shareholders more reasons to panic.
An investment analyst told our reporter that this is the first time a managing director left his duty post for a gubernatorial contest and that this is also a time a family turned round to reposes a commanding position in a bank.
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