GT bank makes refund to GDR investors


Domestic investors to the recently concluded GTBank GDR are to contact the respective underwriters through which their investments were made for collection of surplus monies due.

This development arose following the price determination which has brought down the price of the GDR as a result all domestic subscriptions were adjusted to reflect the offer price of US$11.20, whilst taking into consideration the subscription multiples of a minimum of 50GDRs. A domestic investor that subscribed for 500GDRs would initially have paid US$6,375 based on the Reference Price.

However, following the adjustment to reflect the official price of US$11.20 per GDR, the investor would be allotted a total of 550GDRs, while US$215 will be returned to same as surplus monies.

Explaining the reason behind the refund the bank is making to domestic investor it said, “Given the differences that exists between the Nigerian and international equity issuance process, one of which is the pricing of primary securities, the bank adopted an innovative and unique offering process, with a view to ensuring that such differences are minimised to a large extent in order not to frustrate the transaction and completion time line, while achieving the above mentioned objectives.

“In a typical primary equity offering in Nigeria, a “Fixed Price” approach is often adopted, i.e. investors are advised of a fixed price at which the primary offering will be made on the day an offer opens up till the closing date. However, in international capital markets, a “Book Building” process is often adopted for the marketing and pricing of primary equity offerings. Book Building is basically a capital issuance process which aids price and demand discovery. The Offer price is then determined after the bid closing date.

“Consequently, the underwriters of the domestic tranche adopted a Reference Price of US$12.75 per GDR for the duration of the domestic tranche as a guide for domestic investors, with the caveat that the offer price to be determined on July 20 may close at below or above the Reference Price, given the international market practices. On July 20, 2007, the offer price was fixed at US$11.20 per GDR.”

In July 2007, GTBank became the first Nigerian and African bank to issue a full listed GDR offering on the London Stock Exchange.

The transaction comprised a 2-tranche structure of a simultaneous US$250m domestic GDR offering and a US$500m international offering. The GDRs issued are represented by the underlying ordinary shares of the bank with an exchange ratio of 1GDR to 50 ordinary shares. While the domestic GDR offering is no different from the international GDR offering, this transaction structure was adopted as a means of ensuring that domestic investors were provided with the opportunity of participating in this historic offering.

Without a doubt, the recent GTBank GDR issuance in the international financial markets recorded an unprecedented milestone in the domestic capital markets and would provide the economy with several multiplier benefits.

The growing appetite for quality equity offerings from the international investing community is also viewed as a positive signal of the strong underlying prospects of the Nigerian economy in the short to medium-term. The GTBank GDR currently trades on the London Stock Exchange under the ticker symbol “GRTB”. It is understood that the bank will be issuing a secondary market trading guide for the GDRs to domestic investors in the very near future.

One thought on “GT bank makes refund to GDR investors

  1. Remi Emeka Njoku says:

    Start Saving for Retirement at 16 to Enjoy Old Age

    Saving for retirement, a recent survey has revealed, is not on the minds of most Nigerian adults.
    This, perhaps explains why among other reasons most Nigerians experience miserable old age, and often pose great burden and liabilities to their children and other caring relations.
    Pension management experts are of the view that with the recent introduction of the contributory pension scheme, the problem of miserable retirement life may soon be a thing of the past. Then, that is for people in the formal sector which is the only sector covered by the contributory pension scheme. For people in the informal sector, the situation may remain the same for a long time. This situation is even worsened by the level of job insecurity, high level of unemployment, and drastically low level income among many the working group in both the formal and informal sector in the country.
    Pension experts thus, suggest that one way of accumulating enough savings for retirement is by starting savings at teen age. Sixteen is the prescribed age.
    But, saving for retirement most likely is not on the minds of most 16-year olds, more especially in a country like Nigeria where most teenagers earn nothing.
    One way of achieving this is by taking advantage of some of the special financial products for children being introduced by banks. This could be funded by a parent or grandparent, as long as the parent or grand parent has earned income that is at least as much as the contribution.
    In its simplest form, growing money has three main ingredients: money, growth rate or rate of return, and time.
    When you are 16, you have time on your side. Take for instance, if you decide to take the Intercontinental Bank HappySaver Millionaire Target account, if you save N2,000 per annum, in 28 years you will have saved N1,053,779.97. If you decide to save N5,000 per annum, you will accumulate N1,004,933.95 in 14 years. If you move the annual savings a bit higher to N10,000 it will amount to N1,086,182.55 in eight years. At N15,000 and N20,000 per annum it will amount to N1,184,645.03 in six years and N1,021,170.73 in four years, respectively.
    Take a look at this calculator that I have created and you’ll see what I mean:

    The Power of Starting Young

    Annual
    Amount Expected Inflation Account
    Age Saved Balance ROR Rate Value
    16 252,000 252,000

    252,000

    252,000 504,000

    521,640

    252,000 769,104

    810,180

    252,00 1,062,180

    1,118,880
    After 4 years, you quit contributing
    and let the account grow…

    Real
    Account
    Age Value
    29 2,200,968
    30 2,355,066
    35 3,303,090
    40 4,632,768
    45 6,497,694
    50 9,113,328
    55 12,781,818
    60 17,927,154
    65 25,143,804

    This calculator assumes that you invest N252,000 per year in your early retirement scheme for four years starting at age 16. So, by the time you are twenty, you can stop contributing. The second part of the calculator shows you how much that nest egg could be worth at different points in your life. Keep in mind that these amounts are adjusted for inflation. So, although the amounts may not seem that big, they have been adjusted for inflation. I made it such that you can change the contribution amounts and the expected rate of return and the inflation rate. Even better, withdrawals from this account at retirement will be tax-free if you choose a good institution.
    Pretty cool, eh? It is truly amazing the how such a relatively small amount of money can grow to a significant sum of money given enough years. If you are a 16-year old, you might want to get started on this right away. If you are a parent or grandparent of a 16-year old, have them read this post and consider helping them get started by either giving them the contribution amount or matching whatever they are able to save. It could be the best gift you could give them.
    Try this calculation for a lifetime, and you will be amazed at how much you can save over a lifetime.
    Please do not be deceived. This is a great idea in theory, but how many kids will be able to keep their hands off this money until retirement? There is no penalty assessed for yanking money out of a retirement savings scheme for education expenses or a first home. Few children these days have any concept of delayed gratification. They want the nicest cars, homes, toys, etc. and they want them now. My guess is that a majority of retirement savings schemes started by parents for their teenage children won’t last ten years before the money is withdrawn for an immediate want.
    Another startling revelation by the BusibessDay survey is that women tend to lag behind men when it comes to retirement planning. Surveys show they start saving too late, which means they have to work longer.
    Financial advisors say too many women make the mistake of not thinking ahead. “Women, we’re born with this imbedded thing that says we should not worry about it because we are going to get married and the husband will take care of it. That is not the case. We are not that type of woman anymore,” financial advisor Anna Ibrahim said.
    In addition to starting late, there are other pitfalls for women. Experts say that often times women stop saving for retirement and switch their money to a education or house keeping fund when they have children, something they do not recommend.
    Financial advisors also suggest women buy homes instead of things like expensive cars.
    That’s what Oluremi Adekoya did 14 years ago after her divorce, and it’s going to pay off.
    “Because my house in Aboru, in the Ikpaja area of Lagos has quadrupled in value, that’s my retirement money essentially,” Adekoja said.
    Experts also recommend looking to buy disability insurance and long term insurance sooner, rather than later. Ibrahim said buy it when you’re 40.
    “Lock in now with a lower rate. When you are in your 50s and your friends are all running around looking for good care, you are covered. You already have it,” she said.
    She says the bottom line when planning for retirement is look to the future.
    “Stop being emotional. Do not worry about yesterday. Let us start thinking about tomorrow and start saving today,” she said.
    What’s the right age to begin planning for retirement? Are you too young or too old to start? Regardless of your age, the answer is a resounding “No”.
    Nobody is too young to start saving for retirement. As soon as you are making money, you should be saving money! Still in school and only working part time? No problem. Sock away a few Naira from each paycheck. The power of compounding is magnified the earlier you start saving. Consider this. If you save just N1260 per month starting at age 16 until age 65, you’ll accumulate over N10,332,000 at 6.5% interest. Waiting until you’re 26 years old would require N4,914 per month to reach N10,332,000. Assuming you increase your monthly savings as your pay increases, you can build a substantial retirement nest egg. The longer you wait, the higher the penalty.
    One more important issue to note is that nobody is too old, either. As long as you’re making money, you should still be saving money! Take for instance, if the average life expectancy in Nigeria is 75.5 years, you might live longer. In fact, mathematically half of the population will live longer than the average! So if you are 55 years old and still working, you still have 20 + years to enjoy life. It’s likely you won’t work all those years, so save as much as you can afford to now. Saving N12,600 per month starting at age 55 would give you another N2,142,000 for retirement. And remember, your savings will continue to grow after you stop working, as long as you only withdraw what you need for immediate expenses.

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