Nigerian billionaire Femi Otedola's First HoldCo stake hits $530 million at record close

Femi Otedola's stake in First HoldCo climbed to about $530 million (N737 billion) on Wednesday after the Nigerian lender's shares surged the maximum permitted 9.98% to a record closing high of N79.35 ($0.057), leading the gainers on the country's stock exchange and rewarding a bank the billionaire has spent two years buying.

The jump topped the banking sector and put the parent of First Bank of Nigeria within touching distance of its intraday all-time high of N81.90, set in May. The stock has now risen more than 60% this year, one of the strongest runs among Nigeria's large lenders, and the rally is accelerating into a set of results the market has decided it cannot wait for.

The quarter that lit the fuse

Those results land on July 24. Investors are buying ahead of second-quarter earnings after a first quarter that beat on every important measure, and the anticipation, more than any single announcement, is what drove Wednesday's move. First HoldCo reported profit before tax of N321.1 billion ($231 million) for the three months to March, up 72.2% from a year earlier, with profit after tax of N266.7 billion ($192 million).

The quality of that quarter is what has investors salivating. Interest income rose on stronger loan growth and higher yields, fee income improved, and trading income recovered. Loan recoveries jumped more than fifteenfold to N19 billion ($13.7 million), money the bank had written off and is now clawing back. The cost-to-income ratio fell to 45.2% from 53.8%, meaning far more of each naira of revenue is dropping to the bottom line. Customer deposits at First Bank stood at N18.4 trillion ($13.2 billion).

A week of heavy buying

The momentum has been building for a week. On July 9, First HoldCo executed a block trade of 1.26 billion shares worth N85.61 billion ($61.6 million), the single largest deal on the exchange that day and roughly three-quarters of all market turnover, a transaction the market read as institutional money taking a strategic position. Five other banking stocks rose in sympathy. Wednesday's close extended that surge to a new peak.

A structural catalyst sits underneath the earnings story. Nigeria is scheduled for reclassification into the FTSE Russell Frontier Market Index in September, an event expected to pull passive institutional money into the exchange's largest and most liquid stocks. First HoldCo, among the most heavily traded names on the market, is a prime candidate for those inflows, and investors are buying before the index money arrives.

Otedola's two-year bet

For Otedola, Wednesday's close crystallised the logic of a two-year accumulation. He emerged as First HoldCo's largest shareholder in 2021, took the chairmanship in January 2024, and has bought steadily since, lifting his stake from 13.15% in September 2024 through a chain of purchases. He paid N40.06 a share in a N14.8 billion ($10.6 million) purchase in December, N79 a share in a N43.4 billion ($31.2 million) open-market deal in May, and N44 a share in a N29.6 billion ($21.3 million) private placement in June.

Those purchases carried him past a threshold that concentrates power. Otedola now controls about 9.29 billion shares, or roughly 20.42% of the company, entrenching him as its single largest owner. He has committed well over N250 billion ($180 million) of his own money to the group and has stressed repeatedly that none of it is borrowed, a deliberate contrast with the debt that nearly destroyed his fortune during the oil-price crash of the previous decade.

The entry prices measure the win. The bulk of his stake was bought between N40 and N44 a share, with one tranche at N79, which leaves most of the position well below Wednesday's close. On the shares bought at around N44, the gain approaches 80%. The holding was worth marginally more at the stock's May intraday peak of N81.90, when the stake briefly touched about N760 billion ($547 million).

What the rally is riding on

Other shareholders have ridden the same climb. First HoldCo has delivered total returns of about 353% over three years and is up roughly 146% over the past 12 months, outpacing both the banking sector and the wider market. The share price has risen far faster than earnings across that period, which raises the stakes for the July 24 report and leaves the stock exposed if the numbers disappoint.

The rally is inseparable from the recapitalisation Otedola has driven. First HoldCo is raising fresh equity toward a target of N1 trillion ($719 million) in paid-up capital, double the Central Bank's N500 billion minimum for banks with international operations. June's private placement lifted the group's share capital to about N525.6 billion, already above the regulatory floor, and shareholders have approved raising up to a further N253.1 billion, with proceeds injected into First Bank to strengthen its balance sheet.

The close leaves the stock at a record and the chairman deep in the money, with the results that investors have bet on still nine days away. A repeat of the first quarter would justify the run. Anything short of it, against a price this stretched, hands the profit-takers their moment.

Otedola has not sold a share into the strength. For two years his answer to every rally has been to buy more, and on Wednesday the market bid the stock to a record betting he is right again.