Friday, November 22, 2024

Elumelu, Otedola fight for control of Transcorp

Femi Otedola and Tony Elumelu, two of Nigeria’s richest men, are battling for control of Transcorp, Nigeria’s biggest quoted conglomerate, which has interest in power and hospitality.

The billionaires have each raised their stakes in the company in the last two weeks, with each trying to outmanoeuvre the other.

It started two weeks ago after it became clear Mr Otedola, who has interest in oil and gas and previously had no stake in Transcorp, had bought about 2.245 billion shares of the company, acquiring 5.52% of the shares.

The deal caused a frenzy in the market, driving Transcorp’s shares up by 68% within one week as investors piled in to own a bit of the firm. By April 19, Transcorp was the most traded stock on the Nigerian Exchange.

Its share price rose from ₦1.40 to ₦2.35 in the week since the acquisition was announced, an average of approximately 10% per day, which is the highest allowed daily rise.

Transcorp share surges after Mr Otedola’s acquisition. Image: Bloomberg

The acquisition made Mr Otedola the biggest individual shareholder of the company, displacing Mr Elumelu, the chairman of the firm.

“I welcome Otedola’s investment in Transcorp,” Mr Elumelu said in an interview with Arise TV on Wednesday. “Because the more people show interest in the company and invest in the company, the better for shareholders.”

On Thursday, a filing on the Nigerian Exchange showed Mr Elumelu has acquired additional shares through his investment company Heirs Holdings Ltd. in response, dramatically raising his total stake from 2.07% to 25.58%. The development was first reported by Bloomberg.

Mr Elumelu has interests in banking, power, oil and hospitality.

On Wednesday, Transcorp announced earnings of N32 billion naira in the first three months of the year, with net income of N1.9 billion. Its stock rose 5.76% to N3.12 as of 4.00 p.m. Nigerian time. It is up 173% so far this year, according to Bloomberg data.

Femi Otedola and Tony Elumelu

– What’s driving the interest?

Transcorp, officially Transnational Corporation plc, is a conglomerate with investments in hospitality, agribusiness and energy sectors.

It owns three power plants, which have a combined installed generating capacity of 2,000 megawatts, and also owns hotels in Abuja, Lagos and Calabar.

In 2021, Transcorp bought a 45% interest in OML 17 for $800 million in 2021 from Royal Dutch Shell Plc, going through a joint venture with Mr Elumelu’s Heirs Holdings.

Transcorp was incorporated in November 2004.

Analysts have speculated tied the appeal for Transcorp to likely prospects of Nigeria’s power sector in 2023 as the Buhari administration comes to an end. A new government after May 29 is expected to accelerate reforms in the sector and make investment more attractive.


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