Emerging details of the controversial acquisition of stone-age, Union Bank by seemingly small Titan Bank offers an interesting peep into the workings of banks and their controlling shareholders. The CBN special investigator says the shareholders worked in concert with the former governor of the apex bank, Godwin Emefiele. This is apparently the bottom line of the poor emerging bank’s problem with the investigator.
Titan Trust Bank Limited, which barely five years ago won the central bank’s permit to run within Nigeria, acquires a major per cent stake in Union Bank of Nigeria Plc.
The lender has positioned itself as a challenger with a heart for big things, making its takeover of better-known Union Bank obviously the biggest upset in Nigeria’s banking scene so far in 2021 and potentially for the whole of the year.
Titan Trust Bank has an alliance with Citibank, headquartered in New York, which serves it as a correspondent bank.
But for the records, the Chairman, Titan Trust Bank, Mr. Tunde Lemo is an astute Nigerian banker and former deputy governor of operations and director of the Central Bank of Nigeria, who has also served as chairman of the Federal Roads Maintenance Agency (FERMA).
His wealth of experience in the banking industry, spans through decades seeing him serve as a managing director of Wema Bank Plc, before he became the deputy governor of operations and director of the Central Bank of Nigeria—serving as its deputy governor of financial surveillance sector, in 2003.
On 2 January 2004 Lemo became the director and chairman of the Abuja Securities & Commodity Exchange Plc.
He was a non-executive director of Africa Finance Corporation since 16 May 2007.
Having garnered the requistite experience in the industry, he became the chairman of Titan Bank and Flutterwave and sits on many other boards.
On Monday 2 October 2021, Tunde blamed infrastructural decay as the reason why investors run away from Nigeria.
On Thursday 23 December 2021 Union Bank of Nigeria Plc, in a disclosure filed with the Nigerian Exchange Limited (NGX), announced that Tunde Lemo owned Titan Trust Bank Limited has reached an agreement with Union Global Partners Limited and other shareholders to acquire a combined 89.39 percent stake in Union Bank of Nigeria Plc.The acquisition eases the path for TTB to become Nigeria’s sixth-biggest lender, with Union Bank’s assets climbing in valuation to N2. 6 trillion at the end of 2021 and Titan’s standing at N246 billion as at December 2021.
“Completion of the transaction is subject to obtaining applicable regulatory approvals and the fulfilment of certain conditions precedent,” Union Bank told Nigerian Exchange Limited (NGX) in a note on Thursday.
The transaction will soften the ground for Titan Trust to hold the largest equity stake by a single investor in any of the country’s publicly quoted banks.
That implies only a limited portion of Union Bank’s shares will be readily available in the open market when the deal is delivered except a corporate resolution to sell down parts of the newly bought interest happens.
This clearly shows that this acquisition plan of union bank, by Titan Trust Bank has been meticulous. The Management of Titan Trust Bank Limited never misled the public about the true position on the acquisition of Union Bank Limited.
The bulk shareholders together owned 93.41percent of Union Banks issued ordinary share capital. The SPA was the product of a long and tortious due diligence process that involved leading financial and technical advisers.
Titan Trust Bank engaged reputable firms like PricewaterhouseCoopers Limited (or PWC) for the financial due diligence, Drey Law Practice (DLP) for the legal due diligence, Norton Rose Fulbright (NRF) UK as Legal Advisers and Citibank London as Financial/Transaction Advisers. The Bulk shareholders engaged a prominent UK Law firm, White & Case, as their Legal Advisers on the transaction.
The acquisition was conducted in the most professional, open, and transparent bidding process. The acquisition was funded by a combination of debt ($300 million) and an additional equity injection of about $190 million, which was contributed by TTBs two major shareholders Magna International DMCC and Luxis International DMCC.
The Certificates of Capital Importation (CCI) for both the debt and the equity financing evidencing the receipt of these funds into Nigeria by legal means have been made available where requested.
The $300 million acquisition facility is sourced from Afreximbank and is priced on SOFR with a margin of 6.25% (all together, almost 12percent pa) and a moratorium period of 30 months. TTB has paid interest on the loan for three interest periods (18 months so far).
TTB sought and obtained all necessary regulatory approvals from its primary regulator the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), the Nigerian Exchange Limited (NGX), and the Federal Inland Revenue Service (FIRS), among others.
Following TTBs acquisition of 93.41percent controlling interest in Union Bank on June 1, 2022, a change in control was effected with the dissolution of the former Board and the reconstitution of a new Board with new leadership.
Olamide Adeniji is a member of the editorial team of TheScript Newspaper
