‘Why We Invested In First Bank’, Honeywell Group Speaks About 15% Stake In FBNH

The Honeywell Group has  said that its additional investment in FBN Holdings Plc is aimed at creating more value for all shareholders by unlocking hidden values in the FirstBank, the commercial banking subsidiary of the company. 

Honeywell Group has recently announced its acquisition of an additional equity of almost five billion shares of First Bank Nigeria through its affiliate company, Barbican Capital Limited.

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The acquisition by the Obafemi Otudeko-led investment company makes it the largest shareholder in FBN with a total stake of 15.1%.  Since the announcement, financial and stock market experts have predicted a rise in stock for shareholders in Honeywell Group in the coming months.

These early predictions are reflected in the N116.6 billion upshot in market capitalisation of FBN Holdings Plc from N612 billion to N728.67 billion when its stock price closed last week Friday. 

Similarly, the price per share of FBN Holdings has reached an impressive milestone following the announcement. At N20.3, the share price not only marked the highest price for the year but also achieved an all-time record since its establishment as a Holdings company. Observers said that the early enthusiasm among business experts around Honeywell Group’s purchase of the additional shares is not unfounded.

The HGL Chairman is reputed for his business acumen since founding the investment company in 1972, with rewarding investments in key sectors of the economy including food, manufacturing, telecommunications, real estate, infrastructure, energy, and financial services over the last five decades. 

Honeywell Group’s exceptional foresight in identifying valuable investment opportunities is, for instance, clearly demonstrated by its involvement in a bidding consortium that successfully secured the rights to launch Econet Wireless (now Airtel), the pioneering GSM operator to commence operations in Nigeria back in 2001. 

In a letter to the Chairman of FBNH, the Managing Director of Honeywell Group, Obafemi Otudeko, reintroduced the company: “Honeywell Group Limited (HGL) is a dedicated long-term investor committed to investing in great businesses with immense growth potential. Our approach involves working closely with stakeholders with a shared vision to foster the creation and enhancement of value for all.

“We understand that this requires time and patience. Our intention is to follow this approach in respect of our investment in FBN Holdings, an iconic institution which we greatly respect and with which we have a deep and long-term relationship, as customers, investors, and board members.”

 And then reiterated the company’s intention – “to work with all stakeholders to create value for all shareholders.

“We enjoy long-standing personal relationships with the company’s other key shareholders, and we look forward to leveraging these relationships as we collectively work towards enhancing the value of FBN Holdings Plc.”

The growth in the Nigerian telecommunications industry is testament to the ability to identify value that HGL has shown over the years with the Nigerian mobile phone and internet industries growing tremendously since that time.

Per a National Bureau of Statistics (NBS) report as of the end of 2022, there currently exists over 222.5 million telephone subscribers in Nigeria. In February, telecommunication companies (telcos) in the country also reported a total of 156 million active subscribers to internet services, with Airtel accounting for about 27%, according to the Nigerian Communications Commission (NCC). With Honeywell Group’s latest investment as a majority shareholder in FBN Holdings the company must see hidden value and this decision may once again signal the potential for significant returns on investment for HGL’s shareholders.

Incidentally, Nigeria’s financial industry is on the verge of astounding growth. The country’s financial sector is showing strong potential for expansion and development, especially with a growing economy, a large population, and improved access to financial services. It is expected by a McKinsey.

Source: VANGUARD

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