Thread by @proshare

.@realFemiOtedola's Maverick Moves: Probing the Mind of a Business Strategist - Matters Arising

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Femi Otedola is a maverick, a mercurial Nigerian business character in the fashion of Elon Musk. His business decisions, like Musk’s, at times, appear random, but they never really are.

They are usually the products of cold-blooded calculations that makes little impressions on… twitter.com/i/web/status/1…

Out of the blocs in Q2 2023, Otedola was at it again. By the second week of April, the energy maven had reportedly acquired a 5.52% equity interest in #Transcorp Nigeria Plc, a conglomerate with revenues coming mainly from hospitality and energy businesses.

The move was less an attempt at muscling in on Transcorp’s agriculture, hospitality (23% of revenue), or Oil & Gas businesses as it was a strong play at easing into the crown jewel of Transcorp’s operations, its energy sector operations (77% of revenue).

#Transcorp is the parent of two large power companies, Ughelli and Afam Power Companies. The Ughelli plant is over twice the size of Otedola’s #Geregu Power Company and produces stronger cash flows and earnings.

#Otedola’s early 2023 purchase of Transcorp’s equity from what appears to be a handsome free float of over 60% of the company’s official equity available for open market purchase on the local equity exchange, the @ngxgrp, opens a grand play for influence and power between… twitter.com/i/web/status/1…

However, given that UBA Nominees has just under 10% equity in Transcorp Plc and that Elumelu is the Chairman of the @UBAGroup, which is parent to the Nominees company, Elumelu would, perhaps in theory, exercise more influence over Transcorp Plc.

Will Otedola’s Transcorp equity purchase topple the energy company’s business applecart in 2023? Not likely. According to a Proshare analyst, ‘The Otedola Transcorp purchase is not neutral, but it is equally not toxic, at least for now. From the outside, it appears that Otedola… twitter.com/i/web/status/1…

He further noted that ‘It has been rumoured that Elumelu has been thinking about consolidating the two Transcorp energy companies into a single separate entity. The new company would have been significantly larger than Geregu and would have given Geregu a blinding speed chase for… twitter.com/i/web/status/1…

Nevertheless, @TonyOElumelu is not likely to pin his hopes on a gentlemanly foray into #Transcorp Plc by #Otedola. The banker did not get to where he is now by being naïve or complacent, the skillful wheeler-dealer can be expected to take countervailing actions to protect his… twitter.com/i/web/status/1…

The billionaire battles at Transcorp Plc will provide several subplots and grist for the rumour mills that will influence equity prices, thereby stirring regulatory nightmares and boardroom scuffles as two alpha males go at it. The consequences are uncertain, but the corporate… twitter.com/i/web/status/1…

The regulatory requirement in reporting a significant equity purchase of a listed company according to NGX Rule 17.13(a) provides that “Every Issuer shall notify The Exchange immediately on any transaction that brings the beneficial ownership in the company’s shares to five… twitter.com/i/web/status/1…

The proper market process would have required that the Broker/buyer notify the Exchange/Registrar of the over 5% share acquisition, the registrar would inform the company who would in turn equally confirm the share acquisition to the Exchange. The Exchange would notify the market… twitter.com/i/web/status/1…

That said, the recent move by the Chairman of #Geregu Power Plc to acquire a 5.52% stake in Transcorp, makes him nominally the single largest individual shareholder in the conglomerate and plugs into what analysts see as his attempt at consolidating his energy industry influence

Industry observers speculate that the Geregu Power Plc boss is angling for a stronger presence in Nigeria's power generation sector through a strategic investment in Transcorp, which owns two companies in the power sector - Transcorp Power Ltd (which fully owns the Ughelli power… twitter.com/i/web/status/1…

As the Bureau of Public Enterprises (BPE) is expected to shortly issue a discharge certificate in the Trans-Afam Plant, business analysts believe that Transcorp is on the verge of emerging as a dominant player in the energy sector with immense influence. Otedola's recent… twitter.com/i/web/status/1…

In addition to the anticipation of increased capacity after the privatization of the ailing Transmission link and the prospects offered by the new Electricity Act, critical power sector reviewers suggest that Otedola's interest in the electricity business may also be influenced… twitter.com/i/web/status/1…

Otedola’s Transcorp gambit appears shrewd, even if brazen. The acquisition gives him the needed trajectory to build a wider influence in Nigeria’s energy market and protects him and Geregu Power from any surprises from a bigger competitor.

Nevertheless, how well the maverick does with his Transcorp investment will depend on how he manages his relationship with Elumelu and other Transcorp board members, going in hot and hungry could rub Transcorp’s old guard the wrong way and lead to a fast and furious race to the… twitter.com/i/web/status/1…

The only other matter arising from this must be the governance oversight from sector and market regulators, and indeed #Proshare, around competition practices. In the main, the market welcomes this development, a credit to Transcorp’s ability to create value, and the… twitter.com/i/web/status/1…