Investor Concerns Deepen as FCMB Again Raises Capital Ceiling to ₦400 Billion

FCMB Group Plc’s decision to further expand its capital-raising ceiling—now lifted to ₦400 billion from ₦370 billion barely two weeks after an earlier increase—has triggered growing unease among shareholders and market analysts. Many argue that the Group’s repeatedly shifting capital targets risk diluting shareholder value and cast doubt on the clarity of its long-term capital strategy.

A Moving Target: From ₦150bn to ₦400bn in 18 Months

The Group’s latest proposal, contained in a filing to the Nigerian Exchange (NGX), seeks shareholder approval to empower the board to raise capital through virtually any mix of instruments, including:

• Ordinary shares
• Preference shares
• Convertible and non-convertible notes
• Local and foreign currency bonds
• Short- and long-term loans

The board would also have full discretion over the transaction structure, pricing, interest rates, and maturity profiles.

While FCMB maintains that the expansion is driven by strong investor interest and the need to meet the Central Bank of Nigeria (CBN)’s recapitalisation thresholds, the rapid escalation tells a different story for many investors.

Concerns Over Strategy and Planning Discipline

In 18 months, FCMB has embarked on aggressive and multiple capital-raising programmes, including:

• ₦144.56 billion raised from its oversubscribed 2024 public offer
• Capital ceiling raised from ₦150bn → ₦340bn → ₦370bn → ₦400bn
• A US$15 million mandatory convertible loan, now converted to equity
• A 2025 public offer targeting ₦160 billion, with market expectations of oversubscription

For many shareholders, the concern is not the recapitalisation itself—but the frequency of changes and the lack of a stable capital plan.

Investor groups say the shifting targets suggest that FCMB either underestimated its actual requirements at commencement or is reacting tactically rather than strategically—creating uncertainty and diminishing confidence in management’s long-range planning.

Dilution Risks Front and Centre

A recurring complaint is the potential erosion of earnings per share (EPS). With every upward revision, shareholders brace for:

• A larger volume of new shares
• A more stretched capital base
• A risk that return on equity (ROE) weakens
• Lower dividend prospects unless the bank rapidly deploys the new capital into high-yielding assets

Given that FCMB has already issued significant equity over the past year, some investors fear the institution could end up over-capitalised relative to earnings power, unless profitability scales proportionately.

The Broader Implication

The bank continues to reassure stakeholders that the revisions reflect strong market appetite and alignment with CBN’s recapitalisation directive. However, market sentiment is increasingly cautious. Investors are clear on one point:

If FCMB continues raising its capital ceiling without demonstrating proportional growth in earnings, shareholder value could be significantly diluted.

As the next public offer approaches and the Group seeks shareholder approval for the expanded ceiling, investors will be closely watching how FCMB articulates:

• Its precise capital need
• A clear deployment plan
• Expected returns on the enlarged equity base
• Timelines for value accretion

The onus is now firmly on management to rebuild confidence through transparency, discipline, and credible execution.