Sterling HoldCo recapitalisation: A blueprint for value creation

Sterling Financial Holdings Company Plc (Sterling HoldCo) has successfully navigated the recapitalisation mandate while simultaneously strengthening investor trust and funding its strategic ambitions.

The group’s recapitalisation journey underscores that in a climate of regulatory change, a measured, transparent, and well-sequenced capital strategy can be a powerful tool for value creation; thereby providing a compelling case study in strategic capital management.

The March 2024 directive from the Central Bank of Nigeria (CBN) for banks to recapitalise served as a strategic litmus test for the entire industry. While the initial response was a public flurry of fundraising targets and announcements, the more instructive developments have unfolded methodically behind the scenes. A close examination of Sterling Financial Holdings Company’s (Sterling HoldCo) approach reveals a calibrated strategy that other financial groups would be wise to study.

From the beginning, Sterling HoldCo treated the N200 billion capital requirement as an integrated financial challenge involving its two banking subsidiaries. The holding company’s response was a structured, three-tranche capital raising programme, comprising a N75 billion Private Placement, a N28.79 billion Rights Issue, and an N88 billion Public Offer. This phased execution allowed for tactical capital allocation between Sterling Bank and The Alternative Bank, mitigating risk and maintaining strategic momentum.

Read also: Investors compete for Sterling Holdco shares

Phased execution…

The first tranche, a N75 billion Private Placement, concluded in September 2024. The operational outcome was a net raise of N73.86 billion. The strategic decision that followed was: a deliberate allocation of N68.8 billion to Sterling Bank alongside a N5 billion capital injection into The Alternative Bank. This immediate action fortified both entities’ regulatory standing and demonstrated a clear prioritisation of resources.

The subsequent Rights Issue in October 2024 provided a critical market-based validation of the group’s strategy. An oversubscription of N10.29 billion signalled robust investor confidence. The subsequent regulatory approval in May 2025 for the N26.639 billion allotment and the restructuring of the excess into a private placement showcased regulatory agility. The tangible result was that The Alternative Bank achieved its full capital mandate, while Sterling Bank’s capital shortfall was substantially reduced to N53 billion.

Triumph in investor relations, market timing…

A critical and often overlooked aspect of this process was the handling of the N10.29 billion oversubscription from the Rights Issue. Sterling HoldCo’s decision to seek approval to convert this excess into a private placement was a masterstroke in investor relations. This move guaranteed that all subscribers who demonstrated faith at the offer price of N4 per share received a full allocation, honouring their commitment and reinforcing trust.

The period of awaiting regulatory approval became a telling indicator of underlying strength. The market began to price in the group’s solid fundamentals and strategic progress, leading to a near-doubling of the share price. This substantial re-rating delivered tangible rewards to loyal shareholders and created powerful momentum for the next phase.

Capitalising on this positive market sentiment, the Group made a bold strategic play. Even before the final approval for the private placement landed, it had already launched an N88 billion Public Offer, keeping the subscription window open for a mere two weeks.

This action, taken with a confidence that distinguished the group from any of the other players, was a strategic move backed by demonstrated market performance. The swift and positive investor response confirmed a deep-seated belief in the group’s direction and execution capability.

Final tranche, forward-looking deployment…

With the recent regulatory finalisation of the N10.29 billion private placement in October 2025 and the injection of N10.11 billion into Sterling Bank, the group’s capital position stands at N157 billion. The remaining N43 billion requirement is set to be fulfilled from the proceeds of the successfully completed Public Offer, which is now awaiting final regulatory approval.

Crucially, the strategy extends beyond mere regulatory compliance. The plan to channel a further N10 billion into its wealth management subsidiary, SterlingFI, and allocate the remaining balance for ecosystem expansion illustrates a forward-looking agenda. This capital enables the holding company to fund its future growth engines while ensuring compliance with CBN requirements.

Read also: Sterling HoldCo public offer opens at N7 per share

H1’25 scorecard in review …

The Group’s strong showing in the first half (H1) of the year followed a successful private placement and rights issue. Sterling Financial Holdings Company Plc reported a 157 percent year-on-year (YoY) surge in profit-after-tax (PAT) in its unaudited results for the half-year (H1) ended June 30, 2025.

The company demonstrated continued momentum in revenue growth, operational efficiency, and capital position. The group’s PAT reached N41.78 billion, up from N16.26 billion in the same period last year. Earnings per share rose significantly to 89 Kobo from 56 Kobo, reflecting a consistent increment in value to shareholders. Gross earnings climbed by 39.7 percent to N212.61 billion, compared to N152.20 billion for H1 2024, while interest income rose by 38.3 percent to N167.16 billion, and non-interest income increased by 45 percent to N45.45 billion, attesting to the Group’s strategic focus on revenue diversification. Additionally, the group’s cost-to-income ratio improved to 64.5 percent from 75.7 percent, underscoring the benefits of ongoing cost optimisation measures.

“Our outstanding half-year results are the product of clear strategic focus and a relentless drive to create lasting value for our stakeholders. Our performance reflects not just robust growth in core income lines, but also our success in building a resilient and agile business model, capable of delivering superior returns even in a dynamic macroeconomic environment.

“As we continue to diversify our income streams and invest in operational efficiency, we remain steadfast in our commitment to responsible growth, prudent risk management, and sustainable impact.

“Looking ahead to the next phase of our capital programme, we see tremendous opportunity to deepen our footprint in Nigeria’s growth sectors and to catalyse meaningful progress for our customers, communities, and the broader economy,” Yemi Odubiyi, Group Chief Executive Officer, Sterling Financial Holdings Company said.

Total assets stood at N4.08 trillion at the end of June, representing a 15.3 percent increase from N3.54 trillion in December 2024. Shareholders’ funds were up 22.9 percent for the period, reflecting the impact of recent recapitalisation and healthy retained earnings. Asset quality also improved, with the non-performing loan ratio declining to 5.1 percent from 5.4 percent at the close of the 2024 financial year.

Bullish in Q4’25 forecast…

Recently, Sterling Financial Holdings Company Plc released its cashflow projection for the fourth quarter ending December 31, 2025. The company forecasts gross earnings of N149.267billion for the Q4’2025 and a pre-tax profit of N22.580billion, according to its latest earnings forecast at the Nigerian Exchange.

Still rewarding shareholders…stock nears 52-week high …
For the period ended December 31, 2024, Sterling HoldCo paid a final dividend of 18 kobo per ordinary share of 50 kobo each. The dividend was paid on July 11 to shareholders whose names appeared in the Register of Members as at the close of business on July 1, 2025. The N8 per share Sterling HoldCo traded on Friday, October 24 represents an increase by 42.86 percent year-to-date (YtD). At that price, the stock nears its 52-week high of N 8.97 as against a 52-week low of N4.34. It has 52,117,012,414 shares outstanding.

Ensuring customers true financial freedom…

In an era when bank customers complain about several charges, Sterling Bank, one of the banking subsidiaries of Sterling Financial Holdings Company Plc announced the removal of Account Maintenance Fees (AMF) on all personal accounts, marking another bold step in its push for customer-focused banking in Nigeria.

Sterling noted that every fee they remove is one less barrier between their customers and true financial freedom, noting that this was the rationale behind eliminating transfer fees in April, and it is the same principles Sterling upholds as the bank eliminates account maintenance fees.

The group’s phased capital raise amid regulatory change offers a blueprint for balancing compliance, investor relations, and growth. As the chapter on recapitalisation closes, the market will be watching to see how this fortified capital base is leveraged to drive the next phase of growth.