Tony Elumelu’s Bold Investment in UBA

This week, Nigerian business magnate Tony Elumelu made headlines with a remarkable investment: he acquired 1.27 billion shares of UBA Bank for a staggering ₦44 billion. What caught everyone’s attention was that this was a move made through his personal investment company, Heir Holdings.

At first, many were skeptical. Why would Elumelu, the chairman of UBA, make such a massive investment in a bank that he already controls? Is UBA struggling financially, or is there something more behind this strategic move? Let's break it down and understand why this investment is both bold and calculated.

1) UBA is Thriving, Not Struggling

To answer the first question: No, UBA is not in distress. In fact, the bank is in excellent financial health. For context, in 2024, UBA reported a profit of ₦767 billion, with gross earnings of ₦3.2 trillion, marking its best performance ever. Even more impressive, the bank saw a 42% increase in deposits, totaling ₦24.6 trillion, and its loan book grew by 35% to ₦7.5 trillion.

On top of this, UBA paid out ₦171 billion in dividends, a 79% increase from the previous year. If a bank is paying out large dividends and making over ₦700 billion in profit, it's safe to say that the institution is doing just fine, both financially and operationally.

2) Why the Big Bet on UBA’s Future?

Given UBA’s solid financials, why would Elumelu pump so much money into acquiring more shares? The answer is straightforward: control and influence.

Before this move, Elumelu was already UBA's largest shareholder with a 7% stake in the bank. But this new acquisition makes his position even more unassailable.

You see, the Central Bank of Nigeria (CBN) recently mandated that Nigerian banks raise their capital reserves. For UBA, that meant raising ₦500 billion to comply with tier-1 banking requirements. While the bank has already raised ₦240 billion, it plans to raise an additional ₦144.8 billion in capital.

When companies raise capital from the public, there’s always a risk of dilution. New investors can purchase shares, thereby reducing the percentage ownership of existing shareholders. Elumelu, understanding this risk, moved to solidify his stake and influence in UBA before new investors come in. In essence, he is ensuring that his "baby" remains in his control, even as the bank raises additional capital.

3) A Vision Beyond Numbers

Beyond the numbers, this investment signals Elumelu's long-term faith in UBA and Africa’s economic growth. UBA is already a pan-African bank with a footprint in over 20 countries, including strong international connections in London, Paris, Dubai, and soon Saudi Arabia. Elumelu's investment reflects his belief that UBA is on the brink of an even more successful future.

But there’s a deeper purpose here. Through Heirs Holdings and his Tony Elumelu Foundation, Elumelu has long championed African-led growth. His investments, including in UBA, are part of his broader mission to foster local entrepreneurship, strengthen private-sector leadership, and promote homegrown capital. This isn’t just about a bank; it’s about Africa shaping its own economic destiny.

4) A Profitable Venture

Elumelu’s stake in UBA is not just a symbolic one—it has been incredibly profitable. His investment has already paid off handsomely. For example, in April 2024, UBA paid a dividend of ₦3 per share, netting Elumelu an additional ₦7 billion. In total, his dividend income for the 2024 financial year amounted to around ₦12.7 billion.

At current values, his total stake in the bank is worth over $80 million. Not bad for an investment that is both financially rewarding and strategically important.

5) A Personal Milestone

On a personal note, this week marks exactly one year since Tony Elumelu invited me to his office in Ikoyi. It was a humbling experience, and I can confidently say that my life has not been the same since. This is a reminder that greatness often inspires those around it, and standing on the shoulders of such giants can open new vistas for growth and success.

Conclusion: A Strategic Masterstroke

Elumelu’s investment in UBA isn’t just about the money—it’s a statement of intent. It shows his unwavering belief in UBA’s future and his desire to maintain control over one of Africa’s most prominent financial institutions. By securing more shares, he’s ensuring that his voice remains central as the bank navigates a changing regulatory landscape. It’s a calculated move that positions Elumelu—and UBA—perfectly for the future.

In business, as in life, foresight is everything. Tony Elumelu just demonstrated a masterclass in leveraging opportunity and maintaining control over his empire.