Custodian Investment plans new capital raising

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By Taofik Salako, Capital Market Editor

Custodian Investment Plc has launched a plan to raise additional capital as the non-bank financial group seeks to bolster its capital base in order to harness opportunities in the emerging insurance sector consolidation.

Directors of Custodian Investment yesterday stated that they will be proposing a resolution for new capital raising to shareholders at their annual general meeting scheduled for mid next month.

The board of the company is seeking shareholders’ consideration and approval to raise additional capital through the issuance of debt instruments, preference shares or ordinary shares or a combination of any of these options through any of the offer methods including private placements, rights issue or public offering.

Other details of the new issue including the offered size, price and period of the issuance will also be determined by the directors in consultation with relevant professional advisers.

Custodian Investment is a leading non-bank financial institution with investments in life and non-life insurance, pension fund administration, trusteeship and property holding businesses.

Insurance companies are in a hot race to raise new equity capital to meet new minimum capital requirements for various insurance functions as directed by NAICOM. NAICOM had in May 2019 released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level. The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion. The deadline was subsequently extended to December 31.

Most analysts agreed that the recapitalization would open up opportunities for mergers and acquisitions, putting the top insurance companies with a large capital base in good stead to acquire other companies and build up their base.