Mike Adenuga-Backed Sterling Bank Set For Holdco Structure
TIER-2 lender, Sterling Bank, is limbering up for the decisive phase of its evolution into a holding company (Holdco), while also laying out the shape that the future beyond its present traditional banking franchise will take as the board waits for the Central Bank and other regulators to green-light the move.
This is just as the bank has signed a Memorandum of Understanding (MoU) with Africa EDUCare, a disruptive innovation educational and healthcare solutions company, to transform higher education in Nigeria with Unify, Sterling’s innovative education management solution.
With assets expanding 11.4 per cent quarter-on-quarter to N1.8 trillion at the end of June, the hope is that the lender can do much more and grow capital at scale to beat competition when it gains holdco status.
That would allow the bank to break away from its current vertical market mould built around traditional banking into a model that captures other businesses within financial services, a privilege lenders operating core banking are not set up for.
“The scheme would provide several benefits to the shareholders of the bank, some of which include facilitating diversification into other permissible business lines,” Sterling Bank said in a statement, echoing a comment by the chair of the board, Asue Ighodalo.
It could also help stoke “growth and enhancing shareholder value and facilitation of a consolidated financial strength of the group, which will improve access and ability to raise capital.”
Mike Adenuga, Africa’s sixth richest man and Nigeria’s third by Forbes’s rating, owns 25 per cent of the bank’s outstanding shares equivalent to 7.2 billion units, held through Silverware Investments Limited.
Sterling Bank said on Monday it would drop its current name for “Sterling Financial Holdings Company” when the transition is done and dusted.
Holding companies, often operating as parent companies to the various subsidiaries under it, hold the controlling stakes in the companies under them, giving them the power to oversee and take key decisions on their behalf, especially in the area of corporate governance with little or no interference in their everyday running.
A major attraction of this business structure, which banks in Nigeria are increasingly adopting, is that other subsidiaries under the entity would not be held liable if any of them go bankrupt.
“The holding company also affords Sterling another opportunity to leverage its successful HEART strategy, which has seen the bank make consolidated investments in the Health, Education, Agriculture, Renewable Energy and Transportation sectors,” the bank noted.
Meanwhile, the signed MoU is conceived to deploy Unify to transform education and administrative management, and to enable Africa EDUCare realise its dream of floating the Maranatha Institute of Science and Technology (MiST), a NextGen STEAM university with an innovative curriculum focused on Sciences, Technology, Engineering, Agribusiness, and Medicine curriculum.
Speaking at the signing ceremony in Lagos, Mr Obinna Ukachukwu, Divisional Head for Business Growth and Transaction Banking at Sterling Bank, said education remains and continues to be one of the five critical sectors of Sterling’s focus under its HEART strategy. The other sectors are Health, Agriculture, Renewable Energy, and Transportation.
“We believe that continued investments in these sectors are key to ensuring the nation’s survival, growth, and prosperity beyond this generation,” Ukachukwu said.
He continued by saying that Unify was conceived to transform the administration of education at all levels in Nigeria. He said, “At Sterling, we believe that Nigerian tertiary education needs to be reengineered before it can be empowered to transform industry, and the corporate world, with the kind of adequately skilled manpower required for the desired impact.”
Professor James Makinde, CEO and President of Africa EDUCare, mentioned that the partnership presents great development prospects for Nigeria, saying that “Africa EDUCare proposes to revolutionise education and revitalise the national economy for global impact through tertiary and vocational education that transfers skills that are immediately usable in the marketplace.”
He added that. “The strategy for Africa EDUCare is to take learnings from developed and developing economies through the design of impact instruction modules that mirror real-life employability needs, leveraged through technology.”
Prof. Makinde, also the pioneer Vice-Chancellor of the prestigious Babcock University, concluded by saying that a strategic alliance with an institution of Sterling Bank’s stature and repute would, in the nearest future, transform the education landscape and assist in transforming this vision into reality.
Also present at the signing ceremony were Adatugo Oyebanji, General Manager, Café One (UNIFY), Olufunso Olunaike, Chief Technical Officer, Café One (UNIFY), Prof. Kamar T. Adeleke, President/CEO of Tristate Healthcare System and Executive Vice President, Healthcare for Africa EDUCare.