First Holdco, the parent company of First Bank and its subsidiaries, published it and sold FBNQuest Merchant Banks. The wholesale bank was sold to EverQuest Acquisition LLP. The information was made available to the NGX on 27 November.
What you should know
FBNQuest is a subsidiary of First Holdco. It was acquired by First Bank in 2014 as Kakawa Discount House Limited. The company underwent a rebranding, with its name changing to FBNQuest.
Since then, First Bank has owned the company for 11 years. However, with the recent publication, the company shifted its focus away from the merchant bank. It was acquired by EverQuest Acquisition LLP.
Divestment is a corporate strategy used by companies to remove a subsidiary, branch, department, or product that top management believes will not have a positive impact on growth and profitability.
The amount involved in the M&A was not disclosed by the Group. A reason for this is the private company status that FBNQuest holds. A private company is allowed to keep its financial results secret in accordance with the law.
The M&A deal is not a one-day event. First Holdco must seek regulatory approval. The apex bank, which regulates all banks, will have to give approval in principle to EverQuest. They must engage an audit firm and a deal maker company to finalise the deal.
First Holdco shares after acquisition
The company's share price remains on the N31 mark after the divestment. The stock closed at N31.05 yesterday. Total volume sold on the NGX was 8,767,085 units valued at N272.4 million. The company hit a 7-day high on the 27th November at a close price of N31.10 per share. This is the same day it announced the divestment.
The result of a divestment strategy is the efficient use of the company's resources. The entity sold was not cost-efficient. The company might be making huge losses from it without any perceived benefits.