• Pan-African lender won't sell at `bottom of the trough'
  • Biggest shareholder Nedbank was against being diluted by sale

Pan-African lender Ecobank Transnational Inc. has scrapped a sale of part of its Nigerian business because falling market values mean it wouldn’t get a good enough price, according to Chief Executive Officer Ade Ayeyemi.

“The market is not right for us to be selling part of that unit,” Ayeyemi, 52, who started the job last month after quitting as Citigroup Inc.’s CEO for sub-Saharan Africa, said in an interview in London Tuesday. “We will not be doing any dilution at the moment. You cannot sell an asset that you don’t have to sell at the time when market prices are at the bottom of the trough.”

Ayeyemi’s predecessor Albert Essien said in June the lender would sell a stake in Ecobank Nigeria Ltd. by the end of 2015 to boost the unit’s capital. This was planned because the Nigerian central bank raised minimum capital thresholds.

Ecobank’s shares have fallen 12 percent in Lagos, Nigeria’s commercial hub, since the end of June, amid concern among investors that a slowdown in China, sub-Saharan Africa’s biggest trading partner, and a looming rise in U.S. interest rates may weigh on economic growth. Togo-based Ecobank operates in 36 African countries, more than any other lender.

Ecobank was considering raising as much as $400 million with a sale of up to 25 percent of the Nigerian subsidiary, Arqaam Capital Ltd. said in a September note.

Adequately Capitalized

“We are adequately capitalized at the moment,” Ayeyemi said. “If there are business opportunities that require us to have more capital, we will support that. We always have the option in future. Nothing is off the table.”

The bank’s biggest shareholder, Nedbank Group Ltd., said it was against being diluted by a sell-down of the Nigerian business, which is Ecobank’s largest. The South African lender spent almost $500 million to buy a 20 percent stake less than a year ago.

“By raising Tier 1 capital at subsidiary level, you’re possibly diluting those who own Ecobank from the holding company level,” Mfundo Nkuhlu, chief operating officer at Johannesburg-based Nedbank, said in an interview at Bloomberg’s offices on Sept. 23. “Any capital raise needs to be economically sensible to the holding company shareholders.”

Ecobank will shun acquisitions “for the moment” to concentrate on boosting shareholder returns, said Ayeyemi.

“The building has been done,” he said. “We now need to deliver on the promise both to customers and shareholders.”

A legal dispute with former CEO Thierry Tanoh, who is claiming about $24 million from Ecobank for unfair dismissal and for defamation, will “get resolved positively in the end,” Ayeyemi said.

Ecobank is trying through London courts to block the payments, which were awarded by courts in Togo and Ivory Coast. In July, a spokesman said the bank was also talking to Tanoh, who left Ecobank in 2014, about an out-of-court settlement.

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