GTCO Holdings is making a significant strategic move by pursuing a direct listing of all its ordinary shares on the London Stock Exchange (LSE), marking an evolution from its long-standing Global Depositary Receipt (GDR) program. This transition, which mirrors the dual-listed structures of companies like Seplat and Airtel Africa, involves the sale of 2.29 billion newly issued shares at a reference price of N70 per share, aiming to raise $105 million. The equity offering, concluded via an Accelerated Bookbuild (ABB) process, is a pivotal step towards the LSE listing scheduled for July 9.

The financial implications of this offering are substantial for GTCO. Upon its conclusion, the group's minimum paid-up share capital is projected to increase to approximately N508 billion, comfortably surpassing regulatory minimums. Furthermore, GTCO's outstanding shares will reach 36.427 billion, and at the current share price, its market capitalization is expected to exceed the N3 trillion mark. The pricing of this equity offering was finalized after an accelerated bookbuilding process that ran from July 2 to July 3, where investor demand surpassed initial expectations, leading to a raise of $105 million against an initial target of $100 million.

Key to this move is the shift from Global Depositary Receipts (GDRs) to a direct listing of ordinary shares. GTCO has maintained a GDR listing on the LSE since 2007, where one GDR represented 50 ordinary shares. A GDR is a bank-issued certificate enabling investors to trade shares of a foreign company on international stock exchanges without dealing with complex cross-border settlements. The upcoming change will see GTCO's GDRs fully delisted from the LSE's main market on July 30, paving the way for the direct listing of its ordinary shares.

The Accelerated Bookbuild (ABB) process adopted by GTCO is a fast-track method for raising capital, typically completed within 24 to 48 hours. Unlike traditional public offerings that involve lengthy roadshows and marketing efforts, ABB targets a select group of institutional investors, inviting them to bid for shares at a price determined by demand. In GTCO’s case, the offer was directed at institutional investors across the US, UK, and other select jurisdictions. This rapid process, where the final price is set once the 'books are filled', allows companies to raise funds quickly and efficiently, often leveraging strong investor appetite.

A significant benefit of this direct listing is the enhancement of 'fungibility'. With the GDR structure, investors held synthetic exposure to GTCO stock. The direct listing means the shares become freely interchangeable between the Nigerian Exchange (NGX) and the LSE, assuming the cross-border settlement infrastructure is in place. This fungibility is expected to improve liquidity and price discovery for GTCO's shares across both markets.

This strategic maneuver underscores GTCO’s robust financial health and strong corporate governance. At a time when many of its peers are grappling with forbearance-backed loan books, GTCO stands out with zero forbearance loans, a testament to its disciplined credit risk management. This move is seen as a re-rating catalyst, offering better price discovery and access to deeper pools of institutional capital. It is anticipated that GTCO, currently trading at a discount to its book value on the NGX, will achieve a more favorable valuation from international investors who are more likely to reward its strong fundamentals.

Addressing concerns about turning away from local investors, GTCO has previously engaged the Nigerian market with an offering that saw underwhelming subscription levels. The group maintains that its Nigerian leg of the offer met its objectives, and this LSE listing serves to access capital that may not be readily available domestically. The timing of this capital raise is opportune, as GTCO's shares have significantly appreciated, trading around N80 today compared to N30 a year ago. By staggering the raise, GTCO has adeptly managed dilution, raising new capital at much better valuations and minimizing the erosion of existing shareholder value. Institutional investors are expected to make capital commitments for the newly issued shares between July 3 and July 31, with official admission to trading on both the NGX and LSE on July 31. The ticker symbol for the shares, which have been trading since July 9, will also be updated from “GTHC” to “GTCO.”