Nigeria’s Securities and Exchange Commission (SEC) probes Unity bank-Milost $1 billion controversy

Nigeria’s Securities and Exchange Commission (SEC) on Monday announced that investigations involving New York based private equity firm Milost Global Incorporation’s $1 billion investment in Unity Bank Plc are still ongoing.

According to the SEC’s acting Head of Corporate Communications Efe Ebelo, “investigation into the Unity Bank-Milost case by the commission was still on, and that anyone found wanting in the case would be sanctioned appropriately in line with laid down regulations”.

With the global slump of oil price that drove oil dependent Nigeria into recession, some small and medium sized Nigerian lenders battled to rebuild capital levels and pay loans. Unfortunately, Unity Bank, which was formed out of the merger of nine banks between December 2005 and March 2006, fell into this category, as it began talks to sell its non-performing loans in 2017 to recapitalize itself.

On 19 March, Milost Global offered to invest $700 million in equity and $300 million in five-year bonds as a means of recapitalizing Unity Bank. For the proposed first equity investment of $250 million, the New York-based equity firm was to get a preliminary 30 percent stake in Nigeria’s second oldest bank. However, on 26 March, News Agency of Nigeria reported that that Milost, through its Chief Executive Officer, Kim Freeman, said it would no longer go on with its proposed investment in Unity Bank.

Meanwhile, prior to Milost’s retreat, Unity Bank had denied knowledge of the investment. In response to this, Freeman released a statement saying his company was approached in 2017 by Unity bank’s chief executive officer and chief financial officer.

“Following the call, a desk top due diligence was conducted by Milost to its satisfaction. On Sept. 4, 2017, a 1-billion-naira financing term sheet was fully executed by both Milost and Unity Bank,” the statement read.

Said Freeman: “The facility, a combination of equity and debt, was provided on the exciting understanding that Unity Bank would delist on the Nigerian Stock Exchange and move its listing to the USA and the signed term sheet was approved by the board of Unity Bank.”

Unity bank countered Milost’s statement saying it did not at any time suggest or agree to move its listing from the NSE to the United States. The back and forth has been ongoing concurrently with investigations.