This week, billionaire businessman Femi Otedola claimed to have acquired 5.52 percent of Transnational Corporation Plc, resulting in N 2.245 billion in shares in the firm in a deal between an entity owned by Otedola and the Asset Management Corporation of Nigeria (AMCON).
Transcorp is a significant Nigerian company with investments in the hotel, electricity, and oil and gas industries.
AMCON’s decision to sell shares may be related to the stock’s increased valuation. In recent years, highly capitalized stocks have seen huge gains.
The NGX’s market capitalisation has climbed by N13 trillion or 43% in five years, from N16.15 trillion in 2018 to N28.25 trillion in 2023.
Notwithstanding the company’s denial of any notification of a prospective acquisition of shares by Otedola, the strategic investment prompted an extraordinary spike in Transcorp’s valuation.
The stock price surged to N1.69 kobo at the conclusion of trade Friday, up from N1.37 kobo when it closed for trading on Friday, April 6, 2023, marking an almost 35% increase in one week and a capitalization of N68.7 billion.
Shareholders and market participants who talked to The Guardian about the development regarded the sale as strategic, stressing that Otedola is a seasoned businessman who has previously created value through comparable acquisitions.
David Adonri, Vice President of Highcap Securities, stated that Otedola is assuming a strategic stance throughout the whole spectrum of the energy and power industries.
According to him, the business magnate is presently undertaking a diversification plan that would provide him access to upstream petroleum holdings as well as the riches that Transcorp power firm is making.
According to Adonri, Transcorp is fundamentally strengthening, indicating a brighter future. He stated that shifting power to the concurrent list is a major changer for the corporation.
“In addition to owning a petroleum marketing firm (downstream) and an electric power generation company, Otedola is also a shareholder in the new Dangote Refinery” (midstream).
“For Transcorp, the stock is appealing currently since its market valuation looks to be significantly below its long-term intrinsic value,” he added.
According to Patrick Ajudua, President of the New Dimension Shareholders Association, AMCON may have began to sell some of the shares it obtained from non-performing assets of banks and other corporations.
According to him, the assets that AMCON obtained through purchasing non-performing loans are being liquidated, allowing Otedola to make the next transaction.
He stated that AMCON today has shares in a number of publicly traded firms, stressing that these are the shares used as security for the non-performing loans that AMCON bought some years ago.
“The shares to AMCON as a consequence of settlements/resolutions.” AMCON would still dump all of these shares if they were to ultimately depart, and they have the right to sell their shares to anybody who expresses an interest in purchasing.
“He has entered as the second largest individual separate from UBA candidates, which is a great development.” That is the beauty of diversification: allowing individuals to come in and give value to the organization.”
Moses Igbrude, National Coordinator of the Independent Shareholders Association, also stated that AMCON has shares in firms that utilized their assets as collateral for loans during the banks consolidation.
“AMCON obtained those shares through bank creditors.” Individuals who borrowed from banks and were unable to repay have forfeited their shares, which AMCON is presently dumping,” he explained.
Dr. Owen Omogiafo, President and Group Chief Executive Officer of Transcorp Group, stated in a statement that while the business has not yet received formal notification of any meaningful interest in its shares, Transcorp welcomes any new shareholder.
“We welcome this vote of confidence in Transcorp’s leadership and management as we continue our steadfast commitment to superior stakeholder returns grounded in our Africapitalism vision.”
“We remain steadfast in implementing our Group’s goal of making strategic investments in critical areas of the Nigerian economy, our transformation agenda, and our capacity to positively contribute to creating prosperity,” she added.
Remember that in October 2021, Otedola became a single majority stakeholder of FBN Holdings Plc by purchasing N30 billion in bank stocks.
During the time, FBN Holdings’ management revealed that the business mogul and his nominee, Calvados Global Services Ltd, had bought a total of 1,818,551,625 units of shares from the company’s issued share capital of 35,895,292,791.
Otedola had used the bank’s leadership issue to increase his shareholding and become the single largest stakeholder of FBN Holding Plc.
Otedola’s investment in Transcorp made him the company’s second-largest stakeholder.
Tony Elumelu, another billionaire, presently controls Transcorp.
Elumelu, the chairman of Transcorp, owns 273.1 million shares directly, 274 million through his Heirs Holdings Limited, and 294 million through HH Capital Limited.
As of December 2022, about 1,695 investors held approximately 89 percent of the company’s shares, with just UBA Nominees owning over 9.25 percent.
