Zenith Bank Set for GDR Listing on London Stock Exchange

Zenith Bank office

Obinna Chima
There are strong indications that the management of the London Stock Exchange (LSE) will this month approve the listing of $850 million shares of Zenith Bank Plc as Global Depository Receipts (GDR) on the international bourse.

A GDR is a negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an Exchange of another country.

Shareholder of Zenith Bank had on November 21 last year, approved the GDR listing on the LSE, as well as the trading on the LSE of the instrument. The LSE last week said it expects an increase in new listings from African companies this year.

According to management of the Zenith Bank, the objectives of the GDR issuance are to increase the bank’s visibility and trading in its securities, as well as to expand and diversify its investor base

Zenith Bank has all necessary approvals on the listing from regulators in Nigeria, Reuters quoted the bank to have said Tuesday, adding that the deal would enable foreigners who prefer to hold dollar assets to invest in the bank.

“Investors can only switch a maximum of $850 million worth of local shares into the GDR programme,” the bank said, adding that the GDR price will be based on the naira exchange rate and the local share price of Zenith Bank. “Hopefully, it will be listed within two weeks," the banker said.

Zenith had total market capitalisation of N674.7 billion on the Nigerian Stock Exchange (NSE) Tuesday, even as it closed at N21.49 per share. One GDR will represent 50 ordinary shares, the bank said. JP Morgan is acting as the depository bank, while Citi will act as the custodian.
Zenith Bank joins three other Nigerian lenders with GDRs trading in London -- Guaranty Trust Bank, Diamond Bank and First Bank.

According to analysts at Renaissance Capital, “given that Zenith Bank is the most capitalised Nigerian bank (with a 9M12 capital-adequacy ratio of 29 per cent) and does not require any capital injection, it makes sense to us that the GDRs are non-capital-raising.”

It added: “The GDR issuance simply gives existing shareholders the option to convert to an LSE-traded instrument. The conversion ratio is 50 common shares to one GDR. We understand that the conversion fee will be waived for the first three months post-listing, and the structure will be somewhat similar to Guaranty Trust Bank’s GDR.”