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Mutual Benefit Plc to raise N2 billion rights issue after breaking dividend drought

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Mutual Benefits Assurance Plc has been granted approval by the Securities and Exchange Commission (SEC) on its plan to raise N2 billion through right issue towards its five-year strategic plan.

What the proceeds will be used for

According to the Chairman, Akin Ogunbiyi, the funds realised from the rights issue will be used to fund the company’s recapitalisation and growth plan, provision of additional working capital and financing the expansion of IT facilities to support its enlarged operations.

The company will sell its shares to existing shareholders by way of rights issue of 4,000,000,000 ordinary shares of 50 kobo each at 50 kobo per share on the basis of one new ordinary shares.

The acceptance list for the rights issue opens on Monday, 6 August 2018 and will close on Friday, 14 September 2018.

The Rights being offered are tradable on the floor of The Nigerian Stock Exchange (NSE) for the duration of the issue.

The chairman also expresses delight that the company has bounced back to profitability to the delight of its shareholders. A dividend payment of N0.20kobo per share will be paid to its shareholders.

In his words:

“We will consolidate on the modest achievements recorded in 2017 by commencing our I.T. transformation blueprint in 2018”.

This he noted will enable the company to eliminate slack time in its processing and ultimately enable them to focus on more customer delights and satisfaction.

Breaking the dividend drought

Recall that the company recently, in a notice sent to the Nigerian Stock Exchange, announced plans to pay its shareholders dividend for the year ended 2017. The last time it paid a dividend was in 2008.

Insurance companies on the NSE, have a history of poor performance in terms of price appreciation and corporate governance. The recent shift in the minimum price floor to N0.01 left many insurance stocks hard hit.

In its 2017 full year reports for the period ended 31 December 2017, the gross premium written increased by 16% from 12.4 billion in 2016 to 14.4 billion in 2017. It also recorded a profit before tax of 1.3 billion in 2017 as against a loss of 1.06 billion in 2016. Net claims paid by the Group in 2017 stood at N5.15 billion from N3.35 billion in 2016, resulting in a 54 percent increase from the previous year.

Mutual Benefits Assurance Plc was incorporated on April 18, 1995, under the name Mutual Benefits Assurance Company Limited. The company was converted and re-registered as a public limited liability company on May 24, 2001. It became listed on the NSE on May 28, 2002.

Its shares price are currently trading at N0.34 on the floor of the Nigerian Stock Exchange. Its one year return is down by 27.61 %.




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