The private sector arm of the World Bank, the International Finance Corporation (IFC) on Wednesday, said it would buy $70 million worth of convertible loans from Diamond Bank PLC to boost the capital base of the lender.
Shares in the bank rose 1.4 percent to an 11-week high, bucking the trend on the Nigerian Stock Exchange, to value the bank at around N41 billion ($254 million).
The IFC said the funding would help finance lending to small and medium-sized businesses in the country.
“The investment provides a unique opportunity … to support Diamond Bank’s expansion into key economic sectors that have relatively low banking penetration,” IFC’s Marcos Brujis said in a statement.
Diamond Bank was not among the banks that had to be rescued in a 2009 bail out by the Central of Bank to prevent a collapse of the over-leveraged banking system.
Last month, it reported a fourfold increase in first-half profits to N .99 billion and raised its Return on Equity (ROE) target for the year to 15 percent from 10 percent.
Shares in Diamond Bank, which has over 200 branches in Nigeria, have gained almost 46 percent this year, compared with an overall rise in the sector of about 30 percent.