The Sun News On-line| Ceo Magazine

As if to prove right the timeless adage which says North, South, East or West, there is no place like home, oh! sweet home. This has become even more evident as most Africans abroad now yearn for their African homeland.

This, to most, sounds like an irony when compared to what obtained before now where most young and virile Africans prefer to risk their lives crossing the Mediterranean sea in search of the proverbial greener pasture.

The Group Managing Director of Ecobank Transnational Incorporated (ETI), Mr Arnold Ekpe, said that this group of Africans in Diaspora have developed a raving hunger for African investments, something that would bring them nearer their root.
Hear him: "Well, most of these Africans do not invest in London or New York any more, they are looking for African investment. So we too are also looking for African investors."

That is exactly what necessitated the criss-crossing of the world by the bank in search of these ubiquitous African investors before its landmark Initial Public Offering (IPO) last August 25 and which is to put its over five billion shares in the hands of new investors. The company was shopping for $2.5 billion fresh funds from three capital markets simultaneously.

On this, Ekpe said: "We had embarked on long due road shows which took us to 18 countries around the world. In North America, in Europe, in Asia and in Africa where we met over 100 sound and potential institutional investors."

This is not the first time Ekpe would execute such an assignment . It is on record that before he joined ETI as the Group Chief Executive Officer in 1996, the position he occupied until 2001, he was Citibank’s vice president and Head of Africa Trade and Corporate Finance for sub-saharan Africa.

He executed the landmark trade and corporate finance deals in West and Southern Africa. Altogether, he had put in over 26 years of African and international banking experience, having also worked in Europe, South Africa and West Africa for Citibank and First Chicago. This first class graduate of Mechanical Engineering from Manchester University returned as Group Chief Executive Officer of Ecobank Transnational Incorporated, Lome, in 2005.That was after relinquishing his position as Chief Executive Officer of United Bank for Africa (UBA) in 2004 after two years stint on the job .

Giving reasons for floating the jumbo offer which also consists of close to four billion rights issue, Ekpe, a Masters degree holder in Business Administration from Manchester Business School, said:
"We also need adequate capital because Ecobank group has been growing very rapidly. Three years ago, we were barely $2 billion in size. But as I am speaking now, we are over $7 billion in size. As we grow bigger, we need more capital. And as you know, bigger banks come from countries like Nigeria, Morocco and South Africa which are also competing in the same region that we are competing. So we need to be significantly capitalized to be able to compete effectively."

As part of this rapid growth, the company is currently in the process of building a $40 million (about N4.8 billion) share centre in Lagos. According to Ekpe, the structure, also known as technology and telecommunications centre, is to provide the platform for the processing of Ecobank's back office operations across its African network.

Ekpe stated that the company invested the same amount on the share centre which was recently commissioned in Accra, Ghana and explained that the share centre would comprise data center, back-up facilities, pan- Africa switch, payment/credit centres and various shares services and processing centre which would make it easy for business transactions . He noted that a lot of major international banks created such centres in India, South Africa and Europe and that ETI believed that it should create its own in Africa. "We are setting up one in Lagos and Lome, Togo, in addition to the one in Accra. The bulk of our operations are to be handled centrally, if one thing happens in one centre, we will have back-up in two other centres. Ultimately, this will translate into shareholders value . There is a revolution going on in the financial services industry.

The industry has become one of the pillars of development of the African continent," he added.
To make investors happy, the shareholders of the company at its last Annual General Meeting in Accra, Ghana, approved a dividend of two cents or N2.40 per share and a bonus of five new shares for every one held. On the bonus issue , he said that the idea was driven by the need to make the share less heavy and bring liquidity to the units and make investors have access to it so that it would be at par with other shares in the market.

He explained that the company planned to register its presence in about 25 to 30 countries of the world before the end of the year noting that the idea was to help African business men do business internationally with ease while assisting other businessmen in those countries of the world do business better in Africa and added that ETI was in the process of setting up offices in Beijing, Dubai, London, New York and Paris.
"Our objective is to make Ecobank products and services available to our people in Diaspora and to link our people and businessmen to opportunities in the international arena," he said. This was even as he said that the idea was to build ETI as a world class African bank so as to make it contribute to the financial and economic development in both Nigeria and Africa at large.
In this report , he explained more about the plan of the company to achieve this lofty mission and what is in it for investors and other stakeholders.

Incorporation
ETI, a public limited liability company, was established as a bank holding company in 1985 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. In the early 1980’s the banking industry in West Africa was dominated by foreign and state-owned banks. There were hardly any commercial banks in West Africa owned and managed by the African private sector. ETI was founded with the objective of filling this vacuum.

The Federation of West African Chambers of Commerce promoted and initiated a project for the creation of a private regional banking institution in West Africa. In 1984, Ecopromotions S.A. was incorporated. Its founding shareholders raised the seed capital for the feasibility studies and the promotional activities leading to the creation of ETI.

In October 1985, it was incorporated with an authorized capital of $100 million. The initial paid up capital of ETI of $32 million was raised from over 1,500 individuals and institutions from West African countries. The largest shareholder was the ECOWAS Fund for Cooperation, Compensation and Development Fund (ECOWAS Fund), the development finance arm of the ECOWAS.
A Headquarters’ Agreement was signed with the government of Togo in 1985 which granted the status of an international organization with the rights and privileges necessary for it to operate as a regional institution, including the status of a non-resident financial institution.

ETI commenced operations with its first subsidiary in Togo in March 1988. Today, the Ecobank Group is a full-service regional banking institution employing over 8,000 staff in over 500 branches and offices in 25 west, central and east and southern African countries namely Benin, Burkina Faso, Burundi, Cape Verde, Cameroon, Central African Republic, Chad, Congo Brazzaville, Democratic Republic of Congo, Cote d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Rwanda, Sao Tome & Principe, Senegal, Sierra Leone and Togo.

The group’s expansion plan includes the opening of new subsidiaries and branches in other Middle African countries as well as representative offices and international banking facilities in the major financial centres that have substantial trading and transaction links with Africa such as London, Paris, Dubai and Beijing.
ETI has two specialized subsidiaries: Ecobank Development Corporation (EDC) and eProcess International (eProcess). EDC was incorporated with a broad mandate to develop Ecobank’s investment banking and advisory businesses throughout the countries where Ecobank operates. EDC operates brokerage houses on all three stock exchanges in West Africa and has obtained licenses to operate on the two stock exchanges in Central Africa: the Douala Stock Exchange in Cameroon and the Libreville Exchange in Gabon. The mandate of eProcess is to harmonize the group’s information technology services with a view to ultimately centralizing the group’s back office operations to improve efficiency and reduce costs.

Network
The Ecobank Group presently has banking operations in 25 countries in west, central, eastern Africa. As a result, the Group is well-positioned to provide banking services to customers conducting business within these countries and to promote trade and investment flows across the region. This unique footprint gives Ecobank broad reach to its customers across the region. The Group’s geographic spread diversifies and protects its earnings stream against country – specific adverse events.

Strategy
The Group’s strategy is to build a world-class financial institution focused on Africa. All initiatives of the group are geared towards positioning the brand as a symbol of convenient, accessible and reliable banking. Its values are transparent, committed, pioneering and multinational. ETI’s strategy and actions are shaped by three key themes driving the banking industry, namely profitable growth, efficiency and scale with the aim of achieving superior shareholder value.

IPO
We were authorized by our general assembly as we submitted to them the need for us to raise fresh fund so that we can have the money to pursue our expansion policy and modernization of most of our subsidiaries. So we got the approval to hold the completion board meeting. Basically, the meeting was held in compliance with the Nigerian regulation. Because as you know, we are listed on three Stock Exchanges, Nigeria, Ghana and Abidjan. The completion Board Meeting here Ghana was in compliance with Nigerian regulation.
The venue of the completion board meeting was at the discretion of the board of the company. You should know that ETI is an international group. So, we decided to hold the meeting in Accra, Ghana, because we felt that it was the most convenient for all the participants, including those from Nigeria. It is important that we discuss it. That was the main reason that we find out that coming down to Accra would satisfy all the regulators.

As we said, we wanted to raise more equity so that we can be in a better position to continue our expansion. Today we are in 25 countries and we plan to add more countries. We believe that size is the most important thing to a banking group like ours. We also want to have a big position in Africa so that African investors can invest in what we like to call an African company. We believe that Ecobank is an African banking group. And we would like it to remain so as much as possible. So that we can give opportunity to all the African investors living in our region, which is ECOWAS region. Presently, we are in South Africa, we are in Eastern and Southern Africa. To give opportunity to all investors to invest in ETI, we floated the just concluded offer to raise $2.5 billion in equity funds. Ecobank has a good record over the years. It is well known all over Africa and outside Africa as a banking group which is doing quite well. It is professionally run, it will give opportunities to all Africans to come and invest in Africa.

The offer was a sort of landmark, it was the first time in the history of Africa that we would have a regional offer on three markets simultaneously. This followed the listing simultaneously on the three markets few years ago. The total amount to be raised is $2.5 billion. Forty per cent of that, which is $1 billion, was in form of rights issue. And the balance of $1.5 billion, offer for public subscription to investors who are not existing shareholders in ETI. So we were expected to publicize the offer across the markets in which we are represented in Cote D’Ivoire, Ghana and Nigeria as well as the eight countries of the UEMOA. And we were also expected to go beyond that to attract Africans in diaspora and Africans in other parts of Africa who would want to buy into the Ecobank story. The pricing of the shares was 27 Cents for rights issue and 25 Cents for public offer. The offer which opened on Monday, August 25 was to run for six weeks.

The plan was that all investors should buy in their local currencies. So if you were to buy in Nigeria, you would pay in Naira; if it was in Ghana, you would pay Cedis; as for buying in UEMOA, you would pay CFA franc. The rate is to be communicated on daily basis. So if you go to the affiliates or when you go to the branch or the retailing bank on that day, there will be a rate guide for you to use to convert the exchange in local currency. Although if you have US Dollars, it is acceptable; you can buy and pay US dollars for it. Let me also add that we have approval from all the three Central Banks in the region; we have the Central Bank of Nigeria (CBN) approval, Central Bank of the UEMOA approval and we have that of Bank of Ghana to collect the fund in both local and foreign currencies.

Global Depository Receipts
Any shares not allocated in the rights issue and the offer for subscription may be offered through an international offering in the form of Global Depository Receipts(GDR) and
As said earlier, we are currently in 25 countries in West, Central, Eastern application may be made for such GDRs to be listed on the London Stock Exchange(LSE).This international offer will have a different time table from the rights issue and the offer for subscription and the purchase price for the GDRs may be different from the subscription price for the rights issue and the offer for subscription.

Performance and Southern Africa. Several other countries which we have just moved into include Angola, Equitorial Guinea, Zambia, Tanzania, Mozambique and Botswana. Our strategic geography is what we call Middle Africa. That part of Africa between North Africa and Republic of South Africa. So all the countries in-between there are the countries we consider as strategic to our expansion. It is important to point out that the purpose of the funding is not only to expand. It is also to further capitalize our existing subsidiaries. As you know in most of the countries, the minimum capital base has been raised. We need to meet the minimum capital requirement from regulatory standpoint. We also need adequate capital because Ecobank group has been growing very rapidly.

Three years ago, we were barely $2 billion in size. But as I am speaking now, we are over $7 billion in size. As we grow bigger, we need more capital. And as you know, bigger banks come from countries like Nigeria, Morocco and South Africa which are also competing in the same region that we are competing. So we need to be significantly capitalized to be able to compete effectively.
In terms of financial forecast, it is important to point out that you will not see our financial forecast in the offer document or prospectus. However, you will see the financial perspective, which would give you an idea of how we expect the group to evolve. If you look at the development of the Ecobank group over the last three years, that will give you the guide to its future development. We also want to point out that a further independent financial analysis of the group published by three other institutions is available. In the international market, that is more reliable than the forecast prepared by the company itself.

Business merger
We have a bank in Nigeria which provides mid-sized banking services the country. Our strategy approved by the board of directors is that we should be one of the top three banks in every market in which we operate. We do that by growing organically and through combinations or acquisitions or mergers. This fund raising exercise doesn’t envisaged a specific transaction in Nigeria, but we are always focused on opportunities that may arise in the course of our doing business there.

Convertible debt
Our shareholders actually gave us approval to raise a total of three billion dollars, $500 million is to be raised in debt, in various forms of debt including convertible debt.Then we have the $2.5 billion, which will be raised in equity. There is no prior allotment. In the event of over-subscription, the directors of the company in consultation with their various regulations will allot the shares with the objective of getting at worth of the shares as possible. So we do not have a prior allotment. We want to ensure that at the end of the day, the shares are allocated or allotted to as many investors as possible. It is not going to be based on dealing countries, we see all our shareholders as shareholders. That is exactly what we are going to do.

Downtime
When investors are running away from one particular investment, they may not necessary keep their money in cash and put it under the table. ETI offers certain benefits which several other investment avenues do not offer. This is a company that pays dividend in dollars and prepares its account in dollars. This is a company that what you invest in, the investment portfolio of the company itself is diversified in so many countries. So no individual country itself has such rare investments. We have locations in 25 countries with multi-currencies.We have people coming from all parts of the region, and if you like, Africa, working for this company. So that diversity alone puts Ecobank shares in a different category of its own. So we are coming to the market at this time because we have done a lot of work. We had embarked on long due road shows, which took us to 18 countries around the world. In North America, in Europe, in Asia and in Africa where we met over 100 sound and potential institutional investors.

They all expressed some positive thinking about the offer. In Africa, we had meetings in Nigeria with several investors, we held meetings in Ghana with several investors, we had meetings in Cote D’Ivoire, we had meetings in Senegal, Cameroon; we had gone to Libreville in Gabon, we had also done meeting in Nairobi, Kenya. And so as we were meeting all these investors, existing shareholders, potential investors etc, the kind of feedback we got gave us the confidence that we were coming to the market at the time potential investors and shareholders in ETI were ready and willing to invest in our company. So the timing was just right.
Well, most of the Africans do not invest in London or New York any more, they are looking for African investment. So we are also looking for African investors.

Investment in Kenya
At the moment we do not have regulatory approval in Kenya from its Securities and Exchange Commission. We do not have that approval yet. Because of that, we could only talk to people on one on one basis as far as investment is concerned. We couldn’t do a road show, we could not mount platform etc. If the investors wanted the share, they could buy it. But we could not make any public statement there. Just as what happened in the case of a Kenya-based company which was invested in by investors from all over the world.Through that people were able to invest in Kenya. I believe that this is also applicable to ETI. As far as business partnership is concerned there, I can say that that is coming on very fine.

As you know, we acquired 75 per cent stake in EBS Bank of Kenya. We have put two or three senior people there. There is an integration process going on at the bank’s office there in which we plan to integrate, first of all, the entire floor; then the middle and the back office. But that process takes some time. So we are very happy with the way the situation is going now. We have already seen some significant improvement in the committee of the bank. And we are looking at prospective additional investments not only in branch expansion but also in possible partnerships with other institutions, which may want to join the Ecobank family.

Prospect
The Ecobank Group will continue to position its business for profitable growth across Africa. Its growth strategy is driven by a combination of factors including increasing market share in existing markets through opening of new branches and channels and combination with local banks ; expansion into new markets with strong earnings potential across the continent; introducing new banking products and services and seeking to tap the unbanked and underbanked sectors of the markets in which it operates.