The Window That Opens for Six Weeks

Somewhere in the paper trail of a Nigerian family, there is often a share certificate. A father bought a bank in the 1990s, the bank merged, the name changed twice, and the certificate moved from a drawer to a file to a box. Then, sometime in 2024, a circular arrived at whatever address the registrar still had on file, and it carried a sentence most families had never read carefully: you are entitled to buy additional shares, one new share for every four you hold, at four naira per share, and the offer closes on a fixed date. That sentence was a rights issue. For a shareholder who read it, it was a choice. For the many whose addresses had gone stale, it was a window that opened and shut without them.

Between April 2024 and March 2026, that sentence went out to the shareholders of nearly every major bank in the country, because the Central Bank had ordered the whole industry to raise fresh capital. On 28 March 2024, the CBN raised the minimum paid-up capital for a commercial bank with an international licence to 500 billion naira, from the 25 billion naira floor that Professor Charles Soludo had set in the 2004 consolidation. Banks had twenty-four months, to 31 March 2026. When the exercise closed, the CBN announced on 1 April 2026 that 33 of 37 licensed banks had met the new bar, and that the industry had raised 4.65 trillion naira to get there. A large share of that money was raised from existing shareholders, through rights issues. Sterling, the bank in the headline this week, did one in 2024: one new share for every four held, at four naira, at a time when its shares traded higher on the exchange. Access Holdings did one at 19.75 naira a share. UBA did one at 35. Zenith combined a rights issue with a public offer. This was not a Sterling event. It was a season.

A rights issue is a short window in which the company you partly own offers you more of itself before it offers anyone else.

So what is a rights issue, actually? A company that needs money has a choice. It can sell new shares to the public, which brings in strangers and dilutes the people who already own it. Or it can go first to its own shareholders and offer them the new shares in proportion to what they already hold, usually at a discount to the market price, for a fixed and short window. That is a rights issue. It is called a right because it belongs to you the moment it is declared. You did not apply for it. You held shares on the qualification date, so the right is yours. A rights issue is a short window in which the company you partly own offers you more of itself before it offers anyone else. The window in the Nigerian recap season typically ran six to eight weeks from opening to closing.

The part nobody sits a first-time investor down to explain is dilution, and it is the only part that decides whether the window mattered. Owning a share is owning a slice of a company, and a slice is a fraction: your shares over the total shares. When a company prints new shares, the bottom of that fraction grows, so every existing slice gets thinner unless its owner buys enough of the new shares to hold the fraction steady. Picture a bank with shares trading at twenty naira. It offers every holder one new share for each share held, at ten naira. A holder of a thousand shares watches the share count double. Simple arithmetic puts the value of each share at roughly fifteen naira afterwards: the old twenty and the new ten, averaged across twice as many shares. The holder who took up the offer put in ten thousand naira and holds two thousand shares worth about fifteen each. The holder who did nothing still holds a thousand shares, now worth about fifteen each, and now owns half the slice of the company they owned the week before. Same company. Same naira in their account. A thinner slice of it.

That is the honest trade at the centre of every rights issue. The discount is real, and it is the compensation for being asked for more money. Taking up the rights costs cash and holds your slice. Doing nothing costs no cash and shrinks it. In many Nigerian rights issues there is a third door, because the rights themselves can often be sold on the exchange to someone who does want the shares, which lets a holder who cannot afford to take them up recover some of the value instead of watching it evaporate. The Nigerian Breweries rights circular of 2024, for example, spelled out all three plainly: accept in full, renounce some or all and sell the rights on the floor of the NGX, or do nothing and let the allotment be cancelled. What is not available is the option of doing nothing and staying whole. That door does not exist.

Now the part that should worry every diaspora Nigerian with shares back home. A right is only useful if you know the window is open, and the window does not send a push notification. Notices and allotment letters have historically travelled by surface mail to the address a shareholder registered when they first bought the shares, sometimes decades ago. The scale of what gets lost that way is documented: the Securities and Exchange Commission has put Nigeria's mountain of unclaimed dividends in the hundreds of billions of naira, roughly 270 billion naira by mid 2026, much of it traced to stale addresses, paper warrants that expired uncashed, and shareholders who had died or moved without updating the registrars. A dividend you miss waits for you in an unclaimed pile. A rights issue you miss does not wait. The window closes, the new shares are allotted to whoever did respond, and your slice is thinner forever. For the reader in Houston or Peckham whose family's bank shares still carry an address in Surulere that nobody has lived at since 2009, the recap season was a window that may have opened and closed without a single letter reaching them. The practical question is unglamorous: does the registrar for any share you hold have your current address, your current email, your current bank details. If the answer is that you do not know, that is the thing to fix before the next window opens.

The season is not over. The banks went first because the CBN moved first. The insurance industry is now running the same playbook on a later clock. The Nigerian Insurance Industry Reform Act, signed in 2025, raised the minimum capital for insurers sharply, life insurers to 10 billion naira, general insurers to 15 billion, reinsurers to 35 billion, with a compliance deadline at the end of July 2026. NAICOM, the insurance regulator, refused to extend it, and by the deadline some fifty insurers and reinsurers had cleared the bar and a handful had missed it. Some insurers raised the money the same way the banks did: Linkage Assurance, for one, turned to its existing shareholders with a rights issue of about 16.2 billion naira specifically to meet the new floor. The pattern is the point. Whenever a regulator raises the capital floor across an industry, the whole industry turns to its shareholders at once, and a shareholder who understands the window once understands it every time.

Here is what this piece is not saying. It is not saying you should have taken up any particular offer, or that the banks are now a good or bad place to put money. Whether to put fresh cash into a rights issue depends on the company, the price, and your own position, and no article can answer it for you. What it is saying is narrower and more useful. A rights issue is not a scam and it is not free money. It is a transfer of choice: the company hands you a decision with a deadline, and the one outcome you cannot choose is to stay exactly as you were. When the next circular comes, and it will come, the reader who understands that much is already ahead of most of the market. Open the letter. Note the closing date. Understand that doing nothing is itself a decision, with a price attached.

This page exists because a short video can tell you that Sterling sold new shares, but it cannot sit with you through what a rights issue actually is, what it quietly does to a holder who sleeps through it, and why the same sentence is about to arrive from an insurance company near you. The recapitalisation season asked Nigerian shareholders one question over and over for two years. The window opens for six weeks. What you do inside it is yours.