Femi Otedola has broken his long public silence on why he continues to pour billions of naira into First HoldCo Plc. In a rare interview, the businessman laid out the thinking behind a stake that has grown steadily since 2021 and now stands at 25.8 percent, making him the group’s largest shareholder. He described the investment not as a short-term trade but as a generational commitment to one of Nigeria’s oldest financial institutions.
The conversation lands at a defining moment for both the man and the bank. First HoldCo’s market value has crossed N6 trillion, and its shares have outperformed most of the Nigerian stock market over the past year. Otedola used the interview to explain what convinced him to buy into a lender that many investors once dismissed as too damaged to fix.
Why Otedola Chose Financial Services
Otedola framed his entry into banking as part of a broader personal mission. He said financial services sits at the centre of the economy because it touches nearly every household and business, and that expanding access to it supports global efforts to reduce poverty. First HoldCo’s scale, with more than 30 million customers and operations across several African markets, gave him a platform he believed could be rebuilt into a stronger, more inclusive institution.
How Close FirstBank Came to Losing Control
The First HoldCo that Otedola began buying into was in genuine distress. Weak governance had taken root at the top of First Bank of Nigeria over several years, and by the time regulators stepped in, more than N2 trillion in bad loans sat on the balance sheet. Otedola said a culture of repeat defaulters had treated the bank as an easy source of credit with little intention of repaying it.
The Central Bank of Nigeria eventually dissolved the entire board of First Bank and its holding company in 2021, citing breaches of regulatory directives and an unapproved leadership transition. Otedola began acquiring shares around that period, a move he described as calculated rather than opportunistic. That accumulation eventually made him majority shareholder, and he became chairman in January 2024.
He pointed to his record at African Petroleum Plc, later renamed Forte Oil, and at Geregu Power Plc as evidence that distressed companies can be turned around with the right leadership, a clear strategy, and disciplined execution.
What Otedola Saw That the Market Missed
Otedola argued that Nigerian banks have long traded at low price-to-book valuations despite delivering strong returns on equity, a discount he attributes to currency volatility, governance concerns, and macroeconomic uncertainty rather than weak business fundamentals. He believed First HoldCo’s underlying franchise value was being ignored because of its troubled recent history.
Fixing that required a full balance sheet clean-up. The group recognised a one-off N1.70 trillion impairment to clear legacy exposures, then launched a recapitalisation drive combining rights issues, private placements, and asset sales that pushed capital well beyond the Central Bank’s N500 billion minimum. By the first half of 2026, pre-tax profit had climbed 83.5 percent year-on-year to N653.40 billion, and return on average equity reached 30.4 percent, which Otedola said was the highest among Nigeria’s leading banking groups.
Building Toward a Controlling Stake
Otedola’s ownership pattern at First HoldCo mirrors his approach at earlier turnarounds. He raised his stake in African Petroleum from 28 percent to 75 percent before selling in 2019, and increased his holding in Geregu Power from 51 percent to 95 percent before settling at 77 percent after listing in 2022. He has said his investment threshold typically sits above 51 percent, arguing that firm shareholder control, exercised with regard for minority investors, is necessary to push through reform.
He confirmed that his total investment in First HoldCo has now passed N600 billion of personal wealth. Risk management has also tightened considerably, with the group impairing more than N3 trillion in bad loans over the past decade as it worked to rebuild its credit culture.
Why This Investment Is Different
Unlike his earlier ventures in oil and power, Otedola said he does not see First HoldCo as an asset to eventually sell once its turnaround is complete. He described the bank’s 130-year history and systemic importance as setting it apart from a single-sector business, and pointed to the trust-based nature of banking as the reason he views his involvement as a long-term, generational commitment rather than a private equity-style exit play.
Inside the 60% Dividend Policy
First HoldCo’s board has adopted a target payout ratio of around 60 percent, a figure Otedola called generous by Nigerian Tier-1 bank standards but justified once a lender has cleared its capital requirements and begins generating surplus capital faster than it can profitably redeploy. He explained that capital adequacy and the Central Bank’s recapitalisation floor take priority, with dividends drawn only from what remains above the capital needed to support loan growth and regulatory buffers.
With first-half 2026 pre-tax profit up sharply and a full-year forecast near N1.2 trillion, Otedola said the group is generating capital ahead of its near-term lending needs, creating room for higher payouts without weakening the balance sheet. He was careful to note that the payout policy is tied to recurring earnings rather than the one-off recovery gains that followed the clean-up year.
How the Market Responded to Otedola’s Investment
First HoldCo shares rose from roughly N47.90 at the end of 2025 to more than N127 by late July 2026, a gain of about 165 percent that briefly made it Nigeria’s most valuable banking stock by market capitalisation, ahead of Zenith Bank and GTCO. Asked how much of that rally reflects confidence in his leadership versus the market simply catching up to the bank’s improved fundamentals.
Otedola’s Long-Term Vision for First HoldCo
Looking beyond the recovery phase, Otedola said his goal is to restore First HoldCo as a genuine industry leader across Nigeria and the wider continent. He framed his legacy as proving that even deeply entrenched institutional failures can be reversed with the right leadership, philosophy, and operational discipline, and said the next phase for the group should centre on sustained growth, deeper trust with stakeholders, and consistent double-digit dividends for shareholders.
What This Means for SMEs
First HoldCo’s recovery carries indirect but meaningful relevance for small and medium-sized businesses that rely on Nigerian banks for credit, transaction banking, and trade finance. A better-capitalised, more profitable banking sector is generally better positioned to extend credit facilities to SMEs, since stronger capital buffers give lenders more room to underwrite risk without threatening their own stability.
The turnaround also offers a practical lesson in governance discipline. Otedola’s account of how unchecked related-party lending and weak oversight nearly brought down one of Nigeria’s oldest banks is a reminder that credit relationships depend heavily on institutional trust, a principle that applies just as much to smaller businesses seeking financing as it does to large banking groups.
There are risks worth watching too. A sustained dividend policy diverts capital that might otherwise support faster balance sheet growth, and if loan expansion slows as a result, SMEs could see more conservative lending conditions even as bank profitability improves. Entrepreneurs seeking financing should track how First HoldCo and its peers balance shareholder returns against credit growth in the coming quarters, since that balance will shape how readily banks extend fresh facilities to smaller borrowers.
Why This Matters
Otedola’s interview offers the clearest account yet of why he has committed such a large share of his personal wealth to First HoldCo, and why he views the investment differently from his earlier ventures in oil and power. With the balance sheet cleaned up, capital strengthened, and a new dividend policy in place, the group’s next test will be whether it can sustain the earnings growth and asset quality improvements needed to justify its re-rating. For now, First HoldCo stands as a rare example of a Nigerian institution that moved from the brink of regulatory takeover to the top of the banking sector by market value within a few years.
