Nigerian billionaire Femi Otedola’s recent purchase of a substantial stake in Transnational Corporation of Nigeria Plc (Transcorp) has set off a flurry of buying activity in the market.
According to the latest announcement by Transcorp, Otedola has acquired a 5.52-percent stake in the company, valued at $12 million, thereby becoming one of the largest shareholders in the diversified conglomerate led by fellow Nigerian mogul Tony Elumelu.
Otedola’s purchase of 2,245,639,251 shares in Transcorp has also triggered significant off-market trades, with United Capital Securities reportedly snapping up over a billion shares in response. While the conglomerate has not yet announced this transaction, the move underscores the immense interest generated by Otedola’s latest move in the market.
Femi Otedola’s investment in Transcorp could lead to boardroom positions
With the acquisition of the 5.52-percent stake in Transcorp, Otedola, a renowned investor known for his shrewd approach of acquiring stakes in undervalued firms and turning them around, aims to unlock untapped potential in the conglomerate which has substantial investments in the hospitality, power, and oil and gas sectors.
Given that he currently leads Geregu, one of Africa’s fastest-growing power-generating companies, Otedola’s move is strategic.
He hopes to create value for shareholders who have seen a significant decline in their investments over the last decade by spearheading Transcorp’s growth.
His acquisition may also position him to secure seats in Transcorp’s boardroom, as he did with Nigeria’s oldest bank, First Bank of Nigeria Holdings Limited (FBNH).
Following his acquisition of a substantial stake in FBNH, two of his senior staff at Geregu – Akin Akinfemiwa and Julius Omodayo-Owotuga — were appointed to the board of FBNH.
What you should know
Founded in 2004 to capitalize on market opportunities requiring heavy capital investment in Nigeria and across sub-Saharan Africa, Transcorp has significant investments in the hospitality, power, and oil and gas sectors.
Despite this, the conglomerate has struggled to create value for shareholders and achieve growth under the present management led by Elumelu.
In a savvy move, Femi Otedola has returned to Transcorp with his latest investment, after leaving the company in 2011 to focus on his power sector investments and Forte Oil (now Ardova Plc), which he sold to Prudent Energy in 2019.
His decision to reenter the company underscores his shrewd investment strategy and his determination to unlock value for investors who have been trapped for over a decade due to the slump in the company’s share price over the years.
With his proven track record, Otedola’s return to Transcorp could be a game-changer, heralding a new era of growth and profitability for the conglomerate.
