Im not sure that Transcorp will be able to pay a dividend so soon.
With the exception of the Hilton hotel they acquired all the other projects they are invoplved in would take a while to produce sufficent revenue. Som I tjink the only credible source of gain would be capital appreciation.

I agree with you on that - with the amount of outstanding shares they have right now,
they will have to shell out over N27billion in order to pay the proposed N1.50 dividends
to pre-IPO investors.

A lot of has changed since their initial projections - they raised way more money than they
even bargained for in the private placement; made some huge investments in NITEL and
the oil blocs acquisitions that they probably did not envision pulling off all in one year, etc.

If you ask me, I will dare suggest that the IPO prospectus will show a drastic change in
the projections compared to those used during the private placement. It will contain more
doses of realities from the hard assets on the ground. There may be more emphasis on
capital appreciation than on dividends - dividends may come several years down the line

Having said that, it suffices to say that the recent capital appreciation will appease most
of the private placement investors even without any dividends. The big question is the
staying power of the capital appreciation post-IPO. Will they be able to sustain investors
interests in the stock by posting serious returns from Transcorp Hilton; begin a visible
turn around of NITEL and MTEL; start the development of the oil blocks, etc? I guess that
is where all the fun comes from - waiting to see!

What's even more daunting is how to make a determination of the fair value of TransCorp shares,

Withoug a track record, most investment banks (stock brokers) have very little to base their research on, and are cautious not to draw the wrong conclusions,

Nonetheless, I can still see the shares hitting 15 Naira by the end of the IPO , but keen to find out what has sustained the keen interest of institutional investors thus far,

The year's running out, and no mention of the IPO, still happening in December?

Determining the fair value is certainly a daunting task. Its very likely they used other
methods of valuation, just not cash flow, which is still perfectly acceptable. Bottom
line, Transcorp is like a venture captal operation - it has little or no financial history
or track record meaning huge risks for investors, but at the same time, returns could
be enormous. Who could have imagined that Google stock will be trading at $484
today? Same can be said about Ebay, Yahoo, etc.

At least in Transcorp's case, they own tangible assets that just needs to be put to
work to earn returns. I am sure somehow all these are factored into the valuation.
As I said earlier, the key is how they are able to transform these acquisitions into
profit centers - investors will applaud them if they make good, but will punish them
if they fail to deliver. But again, timing is everything, if Transcorp succeeds, there will
be new crops of Nigerian millionaires/billionaires, that is those who got on board
when it was riskier - as with most investments.

Barring any unforeseen circumstances, I still think the IPO is a go, before Christmas.

Heard Transcorp IPO is opening on the 18th of December at N7.50. Also heard Dangote and some of the bank directors on its board have resigned . Since the fundamentals of the coy was largely based on the pedigree of its directors Im having a rethink about investing it it any time soon.
All the so called assets of the comapany amount to liabilities in the short to meduim term.
Transcorp is highly leveraged and thus would not be paying dividend any time soon. It would alson take at least 1 year for any turn around in Nitel to produce results and another 2 or 3 years for such results to trickle down to the shareholders in the form of dividends. The oil blocks that they were granted cannot come on stream and begin to contribute to earnings until another 1 or 2 years. The only revenue generating asset they have is Transcorp Hilton .
At the N7.50 per share I think it is a rip off. So I'll be waiting this one out.
I'll rather invest in other stocks in the secondary market.

@  frankiriri

I agree with most of your analysis, TransCorp may represent a longer term investment, especially when compared to the likes on DSR. I also question the timing of boardroom resignations ,   could not have come at a worse time, and should have been managed better (despite differences + regulatory issues), given that the IPO is imminent.

Let's hope this does not impact the IPO too much.

However, I will still invest in TransCorp + DSR. In spite of Transcorp's liabilities, I believe the share value will apprciate significanlty in under 1 year, and that their assets, especially Mtel and Hilton will break even, Hilton in 1 year, Mtel in 2.

Like some of you guys, I read about Dangote resigning from the board on ThisDay.
Granted, Thisday is one of the better newspapers but as always I like to get
multiple sourcing before believing something to be the truth. A clear example of
this is the IPO announcement which can be sourced from various media outlets.

Having said the above, if its a fact that Dangote resigned, I have to question the
timing because I will assume the NSE will require the boards to be listed on the
IPO prospectus. If anything at all, I would have expected him to pull out either
before DSR's IPO (if he was afraid it will hurt DSR) or after Transcorp's IPO given
the role he has played in the formation.

Another tid-bit from that same article also suggested that the CBN may have been
muscling the bank chiefs (Ovia, Elumelu, and co.) to resign from the board due to
some CBN rules. I may be wrong (please correct me if I am) but I don't see how the
CBN can prevent the banks from having their CEOs represent their respective bank
interests in a venture, afterall, board members are usually nominated to represent
the interests of various share-holders (usually the largest shareholders).

Frankiriri, I believe most of your analysis are on point, you don't come of nowhere
and in a spate of two years make over $600million acquisition and not be leveraged.
Having said that, if the IPO is successful, you are also looking at substantial cash
coming to the company which will no doubt lessen the leveraged situation. But yes,
most of its investments will need a couple of years before bringing in any earnings.

The question becomes is the stock price over-valued today (maybe, most IPOs are),
will there be a market correction to the price in the months to come, or will it continue
to rise and even get more expensive as the months go by. I doubt that most of those
that have invested in Transcorp so far did so thinking they will reap immediate returns
(mind you a 200%+ ROI thus far in 1 year is not bad at all) - I think it was more long
term and if that holds true, you can bet that the price will be sitting tight and most
likely is sure to head north. Hey, what do I know?

With respect to my personal rule about multiple sourcing, it is true that Dangote is out.
The GMD has confirmed.

http://www.independentngonline.com/news/47/ARTICLE/17215/2006-12-14.html

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these people sef!

More on the Transcorp board changes here. From what I can tell, it appears that this was a CBN ruling
which will affect bank heads sitting in any other boards - be it private or public company, not just
Transcorp's as ThisDay's report may have mischievously suggested earlier.

http://www.vanguardngr.com/articles/2002/north/nt115122006.html

It's of some concern that, barely three days to the IPO launch, there is no relevant info on the TransCorp website regarding the public offer. The website itself was upgraded recently, then suddenly restored to it's previous, dull version!

Has anyone seen the IPO prospectus, ? This offering by TransCorp may be the biggest to date, but I sincerely hope that bad press and the seeming uncertainty sorrounding constitution of board at such a sensitive time does not harm their cause.

why all these cork ups anyway, these people are professionals in their field but just cant get this right. i think theres too much politics in this company
looks good on paper though

I was thinking the same thing too, was informed there were a few glitches that needed to be fixed,
didn't think it would take this long though. Hopefully, it should be up with the relevant prospectus come
Monday.

As for politics, Transcorp was initiated by the #1 political leader of the country so naturally you will
have the for and against based on people's political orientation. Luckily though, its now public, if
anyone wants to pick up 1billion shares irrespective for their feelings towards OBJ, the IPO is here.

The board shakeup at this critical time is a major factor, only time will tell how the IPO does. Also, it
will be interesting to see the extent of the underwriters involvement, which if anything at all will
ensure a successful IPO whether the general investor public respond or not. I believe the prospectus
will reveal that.

Finally, its important to note that these guys exit does not necessarily mean the exit of their personal
investments from Transcorp. They will still have a say in Transcorp indirectly considering that their
holdings pooled together may be significant - a shadow board if you will.

As per looking good on paper, can you say Cadbury enough?

It would seem www.transcorpnigeria.com is being upgraded again, as the site's currently offline. I'm keen to get my hands on their prospectus so I can forward to my 'learned' collegues in the UK looking for viable / safe medium term investments in Nigeria.

I didn't say transcorp is a bad buy. Just said that since Im looking at the short to meduim term I can put my money there. i would rather take my chances in the secondary market where I can make immediate gains in companies that are more productive and then invest in transcorp when the outlook is brighter.
As things are I dont see them coming out with any results in the next six months and what else will drive the profit up if not release of improved results.
Dont be fooled by the price appreciation that accompanied its listing. It's all hyped. The true results will be known after the initial offer closes. Remember Intercontinental that was at N16.31 but is currentrly struggling around the IPO price of 13.5.

You are right. If your investment horizon is short term, then yes, Transcorp is not the way
to go. Stock market and hype usually goes hand in hand.

No, we are not fooled by the price appreciation - prices goes up and down depending on
the market (demand and supply) and performance. There are those who are interested in
a 20% or 30% profit - they will buy the IPO and sell shortly afterwards. This is perfectly fine,
but there are others who are interested in the long haul being that its a start up.

But as you and I know, neither one of us can really say for [b]certain [/b]whether the price
will continue to trend upwards or downwards post IPO. I will need a crystal ball to be able
to tell you whether I will be better off buying now or in 6 months. If I had such power, I
would have quit my day job by now.

However, I happen to be in the camp of those who are in it for the potential long term capital
gain - way more than the 35% I can make now by buying at N7.50 and selling at N9.71.
Cheers.

However, I happen to be in the camp of those who are in it for the potential long term capital
gain - way more than the 35% I can make now by buying at N7.50 and selling at N9.71.

how many years roughly are you thinking

For me, TransCorp represents a medium to long term investment, and I've had no reason to regret my decision to invest in the IPO.

My investment has more than doubled and l have to say the returns have greatly inspired me to raise my stakes in the Nigerian stock market.

Also, I have no intention of dumpting the shares just yet, I'm willing to ride the stormy waves for another couple of years. I still hold that the share price can touch N13 by this time next year.

Hard to say - but generally my horizon has been in the 3 to 5 years range. That is certainly enough
time for them to have put the already acquired assets to work and enough time for investors to begin
to expect some serious returns - no more fancy stories about being a world class company, etc.

Although I am yet to see the numbers (hopefully when the prospectus is available), but I hear the
Hilton is being turned around already as the key indicators are trending positively. After much talk,
at some point you have to deliver, else you will begin to lose the confidence of investors.

Like I might have hinted earlier, each individual has to make an investment decision with the right
time-line that they are comfortable with - while desirable, we didn't get into Transcorp earlier on
expecting any serious returns in the first 1 or 2 years. Most new ventures take a few years to
incubate and that is also the case with most privatized entities, it usually takes a couple of years
for a complete turn around.

oshkosh - I will ditto that. You are looking at another major believer in the Nigerian stock market!
As it is, the higher the risk, the higher the potential for returns. Transcorp has been very good thus far.

I had been planning a significant (by my standards at least!) investment in dangote sugar of approx N10M, but have been advised by my broker to give it up, that the shares will certainly be oversubsribed.  Unless offcourse I'm prepared to have the excess returned down the line. I'm not prepared to tie my money down in this fashion.

Someone did suggest the use of varying names, but I don't want to get into all of that especially as I'm not based in Nigeria.

Anyone with ideas on how to increase the chances of full allotment?

@oshkosh
could wait until after the IPO and buy on the secondary market. Though I believe that you should just take your chances

For those interested, Transcorp prospectus is available online at www.vetiva.com

Quick Observations:

- It clearly states on the very first page that there are risks involve in any investment, Transcorp
including. Seek professional advice and if you are not comfortable stay out, doesn't mean you
have to bad-mouth it, just stay out!

- From my quick read, its certainly a stock to buy if you are in it for the long term, something a few
of us have recognized earlier.

- As a result of the acquisitions, Transcorp is highly leveraged, however, if the IPO does well, their
liquidity situation will improve drastically.

- I believe they have made some very conservative assumptions regarding projected earnings and
dividends, hopefully they will meet or exceed those projections.

- Dangote owns over 1 billion shares of Transcorp, implying that even though he is not on the board,
he is still a believer and will be paying very close attention.

- Finally, I now hand over to the experts to dice and slice at the prospectus, I am looking to learn
something new from your professional analysis.

Transcorp is a no-no for anybody whose investment horizon is less than 3 years.Thier financials show that they are expecting to make losses until the year ended 2009 when they report a small profit. So 4 people like me I'll rather invest in other stocks and then buy transcorp sometime in 2009.

hey guys!read this thread thru and thru and i'm glad i left the entertainment forum just in time
i don't know jack! about shares but i want to invest in them.
tired of my frivolous spending.right now i have like 20k [paltry,aint it?]
but i hope it will fetch me some more in few months.
just wanna know the basics,terms,risks involved,stuff generally
@freelance ,hope you got my mail!

gianni:

hey guys!read this thread through and through and i'm glad i left the entertainment forum just in time
i don't know jack! about shares but i want to invest in them.
tired of my frivolous spending.right now i have like 20k [paltry,aint it?]
but i hope it will fetch me some more in few months.
just want to know the basics,terms,risks involved,stuff generally
@freelance ,hope you got my mail!

hmm few months? in the nigerian stock exchange nahh your certificate will probably just be arriving after 3months, you need like a year to get something tangible

LoverBwoy:

hmm few months? in the nigerian stock exchange nahh your certificate will probably just be arriving after 3months, you need like a year to get something tangible

really?
i guess that is lesson number one!

I need about 100,000 units of Dangote sugar or NASCON. If you HAVE A substantial quantity and is interested, reach me on 08029959940. I am willing to buy at premium rate. Please no time wasters.

Any news on TransCorp, was going to buy some, but looks like it's suspended again only a few days after the IPO suspension was lifted, anyone know why?

@Josho
I think Transcorp was placed on suspension to prevent its shares from going further southwards. It seems yatchloads of the shares are getting into the market without  buyers. The idea of waiting for two or more years before getting any returns on your investment dont seem to go well with most nigerian investors. Besides there are other stocks that can give much more within that time frame. transcorp is suppose to be a long term investment with bias towards capital appreciation. Getting on the train in hope of netting a quick profit in the short term will be a major investment mistake.

@Cleric

You can't get Dangote Sugar and Nascon now. Investors have not received their certificates. even if they do, they are not going to sell until the price notch up to N36-N40. you should look forward to further price appreciation in the weeks ahead.

ebony9ja:

@Josho
I think Transcorp was placed on suspension to prevent its shares from going further southwards. It seems yatchloads of the shares are getting into the market without buyers. The idea of waiting for two or more years before getting any returns on your investment don't seem to go well with most nigerian investors. Besides there are other stocks that can give much more within that time frame. transcorp is suppose to be a long term investment with bias towards capital appreciation. Getting on the train in hope of netting a quick profit in the short term will be a major investment mistake.

@Cleric

You can't get Dangote Sugar and Nascon now. Investors have not received their certificates. even if they do, they are not going to sell until the price notch up to N36-N40. you should look forward to further price appreciation in the weeks ahead.

well when i look at the volume of trades that have been done on the shares of dangote sugars it keeps changing from day to day,does that not mean that they are already trading the shares ? i had asked this question on another thread because i would like to know if dangote investors have already gotten their certificates already as the IPO was just recently concluded ,if there are ways to get round the delays of getting the certificates after buying IPOs ,then i would start singing ipo songs right now .someone should plz throw some light on this .

LoverBwoy:

hmm few months? in the nigerian stock exchange nahh your certificate will probably just be arriving after 3months, you need like a year to get something tangible

This maybe true if you chose to wait for the certificate. But with the new E-IPO now in place once the allotment schedule is cleared by SEC, the shares u applied for will be credited to your CSCS account and pronto you are ready to start trading.
The E-IPO started with the intercontinental bank PO and all offers since then have had provision for it.