First HoldCo Plc's performance for the half-year ended June 30, 2025 H1/Q2 Result

First HoldCo Plc – Restructuring for Resilience Amid Capital and Governance Shifts

Strategic Divestment and Ownership Realignment: Unwinding the SPV Structure

First HoldCo’s plan to dispose of shares held via a Special Purpose Vehicle (SPV) marks a significant step in its broader capital restructuring and compliance drive, aimed at aligning with the Central Bank of Nigeria’s (CBN) revised capital requirements.

The recent transfer of a 25% stake to RC Investment Management Ltd., an SPV tied to Renaissance Capital, is being positioned as temporary, with a stated intention to divest these shares on-market. Though no timeline has been set, the move reflects management’s commitment to streamlining the group’s ownership structure, possibly reducing opacity around beneficial ownership and improving regulatory optics.

Capital Raise in Focus: N350 Billion Private Placement Underway

Following a successful N147 billion rights issue, First HoldCo is advancing plans for a N350 billion capital raise via private placements this quarter. These efforts are targeted at:

• Meeting the CBN’s minimum capital threshold.
• Strengthening the balance sheet.
• Supporting expansion initiatives and regulatory compliance.

Management has reassured investors that the capital-raising process is unaffected by the recent share divestments, indicating clear separation between strategic financing and equity restructuring.

Historic Block Trade and Founder Exit: A Governance Inflection Point

The exit of Oba Otudeko, a long-standing stakeholder and prominent figure in the company’s history, via a landmark N323.4 billion block trade (10.43 billion shares at N31/share) has created space for new shareholders and possible strategic realignments.

The buyer, RC Investments Ltd., now holds a substantial stake (~25%) in First HoldCo, raising market expectations for potential changes in board composition, corporate governance, or strategic direction.

This transaction, executed off-market across 17 negotiated deals, stands as one of the largest block trades in NGX history, and signals a changing power dynamic within the HoldCo structure.

Operational Snapshot: Growing Balance Sheet, Declining Profitability

Despite undergoing structural changes, First HoldCo has reported continued balance sheet growth:

• Total assets rose from N26.5 trillion (FY 2024) to N27.2 trillion in H1 2025.
• Customer deposits increased from N17.2 trillion to N17.9 trillion in the same period.

However, profit before tax (PBT) declined to N356 billion in H1 2025 from N412 billion in H1 2024, raising concerns about cost pressures, margin compression, or capital efficiency during this transformation period.

Strengths

• Active Capital Management: N497 billion combined capital raise strategy demonstrates strong regulatory alignment and growth financing.
• Asset and Deposit Growth: Expansion in core balance sheet indicators shows underlying business traction despite macro and internal shifts.
• Governance Reset Opportunity: The exit of a key legacy shareholder and entry of new investors could lead to improved governance and fresh strategic perspectives.
• Regulatory Compliance Orientation: Proactive steps to meet CBN capital thresholds reduce regulatory risk.

Weaknesses & Risks

• Profitability Decline: Falling PBT in H1 2025 raises questions on earnings sustainability amidst restructuring.
• Ownership Uncertainty: Temporary SPV holdings and undisclosed beneficial owners could cloud governance visibility and investor confidence in the short term.
• Execution Risk on Capital Raise: Delays or dilution risks from private placements could affect shareholder value or market perception.
• Strategic Ambiguity: Lack of clear post-restructuring strategy or reinvestment roadmap could limit the market’s ability to re-rate the stock in the near term.

Conclusion: Transitional Phase with Strategic Upside Potential

First HoldCo Plc stands at a strategic crossroads — divesting legacy shareholding structures, raising fresh capital, and navigating a shift in governance dynamics. While operational earnings have softened, the company’s asset growth and regulatory compliance efforts signal resilience.

The successful execution of the N350 billion capital raise, combined with greater transparency in ownership and strategy, could serve as catalysts for long-term value creation. However, investors should monitor near-term risks tied to governance clarity, earnings trajectory, and restructuring execution.