Against the backdrop of borrowing rates reaching the 30 per cent range, Nigerian listed companies are increasingly turning to equity capital as an alternative source of funding.
Apart from the trillions of naira raised by banks in the race to meet the new paid-up share capital requirements, non-bank corporates have also developed a strong appetite for what they consider non-distress finance. Unlike debt, equity provides a breathing room in an era of expensive debt.
Since June 2024, non-banks have used the Nigerian Exchange (NGX) for a combined N1.72 trillion. Breweries, international breweries and Nigerian breweries have led the way and set the pace for others to follow.
From the start of 2024 to today, the total market capitalization of NGX has increased by approximately N65.3 trillion, from N40.9 trillion as of January 13 to N106.2 trillion. Only about N5.2 trillion of this expansion can be attributed to new listings, as the market has recorded just six new listings in the last two years. This figure pales in comparison to the scale of new capital raised by banks, which have collectively pulled in about N2.55 trillion of new equity.
Read more: N100trn market cap: NGX Group is expanding the definition of value – BusinessDay NG
When share price appreciation is included in this context, banks' contribution of new capital exceeds that of new listings. This largely underlines how capital formation has been driven by existing players rather than new entrants.
biggest lifter
According to an analysis by BusinessDay, 15 non-banking firms have raised growth capital from NGX through public offering, rights issue or private placement within the period under review. The charge has been led by Nigerian Breweries, which has raised N548.7 billion from its 2024 rights issue. The brewing company had initially sought to raise N599 billion; However, the offer was 91.6 percent subscribed.
International Breweries also approached the market with a mega rights issue seeking to raise N588 billion in 2024. The offer was subscribed 87.8 per cent, allowing the company to raise N516.2 billion.
Combined, the N1.06 trillion raised by these two brewers accounts for about 62 per cent of all equity capital raised by non-banks during the period under consideration. Notably, they were the only non-bank to raise equity in 2024. In contrast, 2025 saw a sharp uptick, with the number of capital raisers rising more than 550 percent to 13, led by agro-industrial giant Presco Plc.
The palm oil producer raised N237 billion ($163 million) through a rights issue to be concluded in December 2025, in what is possibly the largest equity raise by an African agribusiness. Another agribusiness player, Ella Lakes, is trying to raise a comparable amount with a N235 billion public offering.
What are these increases for?
At the heart of this equity fundraising wave is Nigeria's persistent high interest rate environment. The rise in rates is driven by inflationary pressures that are set to intensify from 2023, even if the economy gets some relief in 2025. With the benchmark monetary policy rate at 27 percent, commercial lending rates at some banks have risen as high as 36 percent. This has made traditional lending increasingly unattractive for corporates.
As a result, companies looking to expand operations or finance acquisitions have begun to think beyond the framework of traditional bank lending. Presco offers a clear example. In a landmark transaction, the company acquired one of Ghana's largest oil palm producers. Rather than enter into expensive debt arrangements with a bank, Presco chose to finance the deal by granting additional rights to its shareholders, effectively raising long-term capital without the burden of high interest costs.
Adebayo Adebanjo, an investment partner at CardinalStone, said that “equity is better long-term capital because it is devoid of the risk of immediate interest repayments.”
Similarly, Ella Lakes has completed its N235 billion public offering, aimed at financing its most recent acquisition. ARPN, which has a 22,000-hectare plantation in Edo State and includes an integrated palm oil mill and a cassava processing facility. The asset scale highlights why equity was considered a more suitable funding option.
Another player in the brewing sector, Champion Breweries is also trying to raise N58 billion, which includes N16 billion from a rights issue and N42 billion from a public offer. The proceeds are expected to finance the acquisition of the Bullet energy drink brand from Sun Mark International. This is in contrast to a similar deal in the food and beverages sector in 2025, when UACN acquired Chi Ltd, but opted to raise equity rather than finance the transaction through internal cash flow and bank loan arrangements.
For VFD Group, its N50 billion rights issue is aimed at “strengthening the group’s capital base to accelerate strategic expansion”. However, market signals suggest that a portion of the proceeds could be directed toward the recapitalization of AB Mortgage Bank as it converts to a commercial banking license.
On the other hand, Fidson Healthcare's N21 billion rights issue is solely focused on expanding the pharmaceutical company's manufacturing capacity to support future growth.
The pattern is similar to that of Industrial and Medical Gases, which raised N5.8 billion to finance its expansion plans and improve production capacity.
For many of these companies, equity capital provides strategic clarity. “Equity allows management to focus on the real objective of raising capital rather than chasing short-term profits to meet interest rate expectations,” Adebanjo explained.
Equity to repair balance sheet
Apart from expansion and acquisitions, equity raising has also been deployed as a tool for balance sheet repair.
By 2024, many Nigerian manufacturers were under intense financial pressure after enduring several years of losses. Debt levels continued to rise, particularly for companies dependent on imported raw materials which were severely affected by the sharp currency depreciation. Liquor manufacturing companies were the most affected due to foreign inputs and foreign-currency liabilities.
To address these challenges, leading brewers took a different approach from the traditional playbook. Rather than pursuing a direct debt-to-equity conversion, as Cadbury did, Nigerian Breweries and International Breweries implemented a more structured, two-step strategy.
First, shareholders approved plans that allowed companies to convert debt owed by their foreign parent companies into equity. This move laid the groundwork for reclassifying items previously recorded as liabilities in the shareholders' fund.
Subsequently, the companies launched rights issues. While the goal of a rights issue is usually to raise new cash by increasing the number of shares in circulation, this was not the primary objective in this case.
In fact, the rights issue did not result in significant cash inflows. Instead, they created the necessary capital structure to smoothly carry out the loan conversion. With the expanded share capital, International Breweries was able to eliminate its $379.9 million debt owed to AB InBev, while Nigerian Breweries paid off its outstanding debt to Heineken.
In simple terms, brewers didn't suddenly become rich with cash. Rather, they restructured their finances by shifting a large portion of their liabilities from liabilities to owned capital. This move reduced debt pressure, strengthened their balance sheet and improved their financial position without relying on large infusions of new cash.
