…with page out of Carl Icahn’s playbook

…Transcorp investors seek meeting with Board over performance

BALA AUGIE

Billionaire investor Femi Otedola is shaping up to be the Carl Icahn of corporate Nigeria as he continues to take large stakes in companies that are struggling and, subsequently, turning them into cash cows that deliver value to shareholders.

In a Nigerian corporate culture where activist shareholders are non-existent, Otedola is blazing the trail and sounding a rousing wake-up call that business as usual is over for the companies he has taken significant stakes in.

Carl Icahn is an American financier and one of the richest men in the world who is the founder and controlling shareholder of Icahn Enterprises, a public company and diversified conglomerate holding company based in Sunny Isles Beach, Florida, USA.

Icahn is arguably the most famous activist investor of his time, if not all time. The billionaire investor has had his hands in a number of corporate moves over the years, with a number of notable successes.

He buys stakes in firms that he believes will appreciate via changes to corporate policy and he then pressures management to make changes that he believes will benefit shareholders.

What Are Activist Investors?

Activist investors are individuals or groups that purchase large amounts of shares in a public company in order to make a major impact on and changes to the company.

Some activist investors will also try to get a seat on the company’s board in order to achieve that goal. Typically, these investors target companies they believe to be mismanaged or ones that could be run more profitably. The goal is to fix the underlying issue to increase the company’s value and profit from the rise in its share price.

Otedola’s recent corporate interventions

Femi Otedola is a successful and astute investor and has been shaking up corporate Nigeria over a decade as he profits from takeovers and accumulation of shares to the benefit of shareholders.

Such investment strategies which often create wealth and employment are needed to bolster economic growth in a country where over 50 percent of the population of 200 million live on less than $1.98 a day.

As a leading shareholder activist, his efforts have unlocked billions of Naira of shareholder and bondholder value and have improved the competitiveness of Nigerian companies.

One of his most notable ventures was the takeover of struggling petroleum marketer, African Petroleum, (whose name was later changed to Forte Oil), from the government-owned oil company, the Nigerian National Petroleum Corporation (NNPC).

Of course, Forte Oil, whose name was changed to Ardova Plc later it sold its majority stake to Prudent Energy in 2018 is one of the largest downstream oil and gas firms in Nigeria with outlets across the country.

As at the time of sale, Ardova Plc had a market capitalisation of N22.20 billion as at April 18, 2022.

Without ingratiating magniloquence, the billionaire business is deep-witted, sagacious, and a visionary leader who understands that honesty and competence inspire trust. And that investors are allured by dividend paying stocks.

The Otedola lift

The Otedola lift occurs because Mr. Otedola is creating value for the shareholders of the companies in which he takes majority or sizable stake.

There was an upward movement in the share price of First Bank Holding Plc which Otedola bought into to become a majority stakeholder.

On October 23, 2021, the activist investor and his nominee, Calvados Global Services Limited acquired a total of 1,818, 551,625 units of shares from the Company’s issued share capital of 35,895,292791.

There has been significant improvement in the profitability and balance sheet of a lender since the last quarter of 2022. Hitherto, it had been reeling from deteriorating asset qualities and poor earnings.

The Bank’s return on average equity (ROAE), a measure of profitability and efficiency, increased to 13.70 percent as of March 2022 from 7.20 percent as of March 2021.

It is worthy to note that the lender is efficient at utilizing its operating resources to generate income as cost to income ratio reduced to 65 percent in the period under review from 73.50 percent as of March 2021.

Enhanced balance sheet strength supported by sustained asset quality improvements means Nonperforming Loans (NPLs) improved to 4.70 percent in the third quarter of 2022 from 6.10 as at Q3 2021. Interestingly, the 4.70 percent NPLs is below the regulatory requirement of 5 percent.

It is interesting to note that Femi Otedola made a foray into the power sector, through Amperion Power Distribution Company Limited, a subsidiary of Forte Oil Plc, which acquired the Geregu power plant in 2013 and has invested $94 million in the power plant.

Last year, Geregu Power, the leading power generation company (Genco) in Nigeria, became the first Genco to be listed on the NGX Main Board, a listing segment for well-established companies with demonstrable records of accomplishments.

As part of its growth plans, Geregu Power Plc is bidding to acquire one of the National Integrated Power Plants (NIPPs) being put up for sale by the Federal Government through the Bureau of Public Enterprises (BPE).

“With the acquisition, we will run a combined cycle operation to ramp up capacity to 1,000 MW in 2 – 3 years,” Akinfemiwa, CEO, Geregu Power Plc, said.

Geregu plans to also take ownership of its feedstock (gas), so as to have a vertically integrated power production business, according to Akinfemiwa.

Otedola’s magic fingers needed to invigorate beleaguered Transcorp

Femi Otedola’s magic fingers which turns whatever he touches to gold are needed to transform beleaguered Transnational Corporation Plc, one of Nigeria’s leading conglomerates, into a market’s bellwether stock that magnifies the earnings of owners.

Since Otedola reportedly acquired 2.24 billion shares, equivalent to a 5.52% stake in Transcorp Plc with investment in hospitality, power, and oil and gas sectors, the market has been abuzz with excitement.

Over the weekend news broke that the chair of Lagos-listed Geregu Power Plc, Femi Otedola, has upped his interest in the conglomerate Transnational Corporation Plc (Transcorp) to 6.3 per cent, two separate notifications seen by MoneyCentral show.

Sources tell MoneyCentral that Otedola’s total stake in Transcorp today is over 7% and he effectively is the largest shareholder of the entity.

However, the company is underperforming as financial performance disappoints, and if something urgent is not done, deteriorating earnings risk eroding shareholders’ value or leading to depressed stock price.

Such sharp earnings decline underpins the argument that chief executive officers (CEO) are overpaid and that their salaries are not compatible with shareholders’ return.

Transcorp earnings deteriorate in Q1

For the first three months through March 2023, Transcorp’s net income fell by 63.06 percent to N1.83 billion from a profit of N5.03 billion as at March 2021; and that was the first profit drop since 2015.

The drop in profit is largely due to a N2.45 billion foreign exchange loss on financing activities or borrowing and slow growth in revenue as revenue.

For instance, revenue from energy sent out-which make up 48.94 percent of total revenue- increased by a meagre 4.37 percent to N15.97 billion as at March 2022......

https://moneycentral.com.ng/exclusive/article/otedola-sends-wake-up-call-to-sleepy-nigeria-boardrooms/

Long Read for great minds, some lazy posters whose only flare is tribal bigotry wont read past the second paragraph,


Else let them tell me what paragraphs 10 means

A BRILLIANT SERIOUS TYCOON.

SadiqBabaSani post =122758555:
Long Read for great minds, some lazy posters whose only flare is tribal bigotry wont read past the second paragraph,


Else let them tell me what paragraphs 10 means

WHAT DOES "paragraphs 10" MEANS, PLEASE?

Since you indicated there are more than one paragraph 10 and which of the paragraph 10. Including which of the subheadings?