Zenith Bank: The Marketing of an Initial Public Offering

20 Pages Posted: 16 Jun 2009

See all articles by Gerry Yemen

Gerry Yemen

University of Virginia - Darden School of Business

James G. Clawson

University of Virginia - Darden School of Business

Chinyelu Amangbo

Pan-Atlantic University - Lagos Business School

Abstract

This case is useful in teaching marketing strategy as part of a marketing course. It can also be used to teach promotional strategy. Only one week into Zenith Bank of Nigeria's initial public offering (IPO), Jim Ovia and his management team faced a new regulation that required that the capital base of banks be raised from (Nigerian naira) NGN2 billion to NGN25 billion. They needed to review their approach to marketing the IPO and try something outside the traditional marketing campaigns of public offerings in Nigeria. The highest amount ever realized from the Nigerian capital market was NGN11 billion. The new regulations resulted in Ovia's needing to revise the marketing objectives for the IPO from about NGN9 billion to an unspecified amount that would increase the bank shareholders' fund to well over the minimum requirement of NGN25 billion. The material is particularly valuable in situations where an international flavor is desired or beneficial.

Excerpt

UVA-M-0751

ZENITH BANK: THE MARKETING OF AN INITIAL PUBLIC OFFERING

On Wednesday, July 7, 2004, Zenith Bank Managing Director and CEO Jim Ovia met with the executive committee of Zenith Bank to review the marketing program for the bank's initial public offering (IPO). Zenith Bank was a commercial bank whose head office was located in Lagos, Nigeria. The meeting was convened in response to the Central Bank of Nigeria (CBN) governor's directive that all banks should increase their capital base from (Nigerian naira)NGN2 billion (USD15.7 million) to NGN25 billion (USD196.7 million) by December 2005 or suffer serious consequences, including the possible loss of their universal banking licenses. As Ovia recalled:

Our IPO could not have come at a more challenging time. Liquidity has been low following CBN's mopping up of funds in the last few weeks. The Nigerian Securities and Exchange Commission [SEC] approved three other companies at the end of May to raise a total of NGN26 billion [USD204.6 million], and all planned to go the market at the same time. The highest amount ever raised in this market was NGN11 billion [USD86.5 million] by First Bank of Nigeria in 2002. We only learnt we were billed to go to market at the same time as Guarantee Trust Bank (an existing offer) about two weeks before the opening of our offer. Analysts predicted that the Nigerian market did not have the depth to take on these two giants at the same time but we decided to go ahead and give it our best shot. Six days into our offer and this … our major concern here is that if we do not succeed now it would be a more difficult terrain in the future as the majority of the 89 banks would be trying to raise their capital base through public and private offers.

Two main decisions were to be made at the meeting: whether or not to expand the target market for the offer to include nontraditional customers of the bank and which of the promotional elements used in the marketing of the offers to emphasize.

Company Background

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Keywords: IPO, Commonwealth English, market efficiency, market planning, banks, market signalling, signaling marketing management, strategy, international banking, Nigeria

Suggested Citation

Yemen, Gerry and Clawson, James G. and Amangbo, Chinyelu, Zenith Bank: The Marketing of an Initial Public Offering. Darden Case No. UVA-M-0751. Available at SSRN: https://ssrn.com/abstract=1420585

Gerry Yemen

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

James G. Clawson

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/clawson.htm

Chinyelu Amangbo (Contact Author)

Pan-Atlantic University - Lagos Business School

Km 22 Lekki Epe Expressway
Ajah
Lagos
Nigeria

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