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…. emerges as MoneyCentral’s Corporate titan of the year
Nigerian billionaire businessman, Femi Otedola is MoneyCentral’s Corporate Titan of the Year 2023, as he added over N1.3 trillion ($1.3 billion) in shareholder wealth to investors via his leadership and shareholder activism, which led to the rise in the market capitalization and improved governance in the companies he has invested in or targeted for activism.
Otedola has emerged as MoneyCentral’s Corporate titan of the year 2023, as a result of these feats and many others outlined below.
Otedola has significant controlling stakes in two major listed firms Geregu Power Plc, where he is the Chairman and largest shareholder, FBN Holdings where he remains the largest shareholder with major board seats, and Transnational Corporation of Nigeria, in which he made a major intervention in earlier in the year, that helped to improve governance and shake off lethargy in its shares.
Geregu Power Plc has added N625 billion in market capitalization this year alone making it one of the best performers on the NGX (see chart below). Geregu stock price which began the first day of trading (January 03) in the new year at N149 per share, closed trading on Friday (December 08), at N399 per share, up a whopping 167.79% year to date.
For context, the broad Nigerian stock market has risen just 39.59% this year.
FBN Holdings Plc’s shares were trading at N10.9 per share at the beginning of the year.
But the lender’s shares closed trading at N23.85 as of Friday, December 08 2023, and by deducting the beginning of year price (N10.9), from the current market price (N23.85) and multiplying the difference or capital gains of N12.95 by 35.895 billion total ordinary shares, you get N464.84 billion as capital gains added to FBNH shareholders’ portfolios with Odetola’s leadership this year.
FBN Holdings shares have gained 118.81 percent since the start of the year.
An activist shareholder is a shareholder who uses an equity stake in a corporation to put pressure on its management. A fairly small stake (less than 10% of outstanding shares) may be enough to launch a successful campaign.
In comparison, a full takeover bid is a much costlier and difficult undertaking. The goals of activist shareholders range from financial (increase of shareholder value through changes in corporate policy, cost cutting, etc.) to non-financial (disinvestment from particular countries, etc.).
Just as a golden crown and beaded shoes last long on a good king, so analysts say Odetola is likely to sit on the board of many firms till infinito, with the massive shareholder wealth being created.
Otedola’s short stint at Transcorp triggered unprecedented rally
While Femi Otedola had a short stint at Transnational Corporation or “Transcorp Plc”, his purchase of 5.5 percent stake at the conglomerate in April 2023, which he later sold some fifteen days later, triggered the unprecedented stock rally that the company and its owners are still enjoying.
Prior to the purchase, Transcorp’s share price was stuck for years at an unimpressive level close to or below N1 that indicated investors did not see growth potentials in the company.
On Wednesday April 12, 2023, when news first broke of Otedola’s major stake buy in Transcorp, the share price opened trading at N1.35 per share, and has been on an upwards trajectory since then.
Shares of the conglomerate closed trading at N6.82 per share on Friday (December 8th), for total capital gains of N222.35 billion for investors so far this year (since April 12th).
Transcorp shares have gained 503.54 percent since the start of the year, making it one of the best performers on the NGX All Share index.
Retail investors follow the Otedola smart money
One of the positive fallouts from the investments being undertaken by Billionaire Femi Otedola is that retail investors are often mimicking his trades and as such are benefitting from his deep insights on the markets.
“I was able to buy 300,000 shares of Transcorp at N3/share through my brokers, when news came out that Otedola was accumulating shares of the company,” Jerome, a retail investor surveyed for this story, told MoneyCentral.
“I am still holding onto the shares and have not sold as I think it will get to N10. My only regret is not buying more as I bid for up to 1 million shares then,” he said.
Indeed, many analysts MoneyCentral spoke to said the “Otedola factor” has been a major reason for the resurgence of the shares of Transcorp Inc.
“It made the controlling shareholder realise the goldmine that Transcorp could become with better governance and strategy,” one buy side analyst told MoneyCentral.
Transcorp, today has a market capitalisation of N277.2 billion, which compares to less than N100bn before Otedola began to purchase its shares.
Improved profitability, future growth driving share prices higher
The shares of firm’s Otedola has invested in are not rising because of a bubble, but due to the fundamentals of the companies which are solid, and the growth outlook which is robust.
Take FBN Holdings for instance, there has been significant improvement in the profitability and balance sheet of the lender since September 2022.
FBN Holdings Plc profit beat analysts’ estimates for the third quarter of 2023 as solid earnings supported organic capital generation.
The lender also revamped its risk management, which resulted in significantly improved asset quality.
Its profit after tax (PAT) surged by 159.22 percent to N236.41 billion as at September 2023, from N91.20 billion as at September 2022.
Operating profit surged by 155.20 percent to N269.94 billion in the period under review from N105.53 billion as at September 2022.
The growth in profit was largely driven by a foreign exchange revaluation gains of N251.22 billion.
Robust non-interest income revenues were underpinned by increased transaction volume, rapid penetration of digital and transaction banking offerings.
The Central Bank of Nigeria (CBN) has also approved the appointment of Femi Otedola as Director of FBN Holdings Plc.
FBN Holdings stated this in an official statement released on Wednesday August 16 to notify shareholders.
“In accordance with the Nigerian Exchange Limited (NGX) Rule Book, we hereby notify the NGX and the investing public of the appointment of Mr. Olufemi Otedola, CON as a Non-Executive Director of FBN Holdings Plc.
“The appointment by the Board of FBN Holdings Plc has been approved by the Central Bank of Nigeria (CBN) and endorsed by the Shareholders at the Annual General Meeting held on August 15, 2023. The appointment is effective August 14, 2023.”
For the first nine months through September 2023, Geregu Power’s pre-tax profit spiked by 25.30 percent to N17.48 billion from N13.95 billion as at September 2022.
Revenue was up 42.92 percent to N55.74 billion in the period under review from N39 billion the previous year.
The leading power generation company (Genco) in Nigeria has a healthy balance sheet as there was a 763.07 percent surge in net cash generated from operating activities to N37.57 billion, in the period which gives the company the means to meet debt obligations, shell out for expenses, reinvest in business, endure downturns and finally return wealth to shareholders.
Geregu Power’s debt to equity ratio (D/E) fell to 0.45 in September 2023 from 0.67 as at September 2022. Simply put, what this means is that Geregu Power has N0.45 of debt for every Naira of equity.
The largest shareholder of Geregu Power and billionaire investor Femi Otedola has reiterated that the company will continue to invest in ventures that deliver higher returns to shareholders in the form of share appreciation and bumper dividend.
Recently, the power firm partnered with the Lagos State Government, the State Grid Corporation of China and the African Development Bank (AfDB).
Geregu alongside its co- investors and technical partners, the State Grid Corporation of China (largest electricity company in the world) have agreed in principle to go into a partnership with LASG to enhance its transmission capacity by circa 3,000MW through a combination of upgrades and new development in the short-medium term with the AFDB acting as the lead arranger and financier in the partnership.
The objective is to support stable and affordable electricity to Lagos state residents ahead of building and developing a state grid with a capacity >10,000MW in the long term.
The benefit of this quick win is that it allows both distribution and transmission upgrades for the immediate provision of a minimum of 3,000 MW which is well over the current 500MW supply.
Corporate social responsibility
In October 2023, Otedola extended his philanthropic arm by donating a generous sum of N1 million to each of the 750 students of Augustine University.
The newly inaugurated Chancellor of Augustine University announced the scholarship donation to each student enrolled in the institution for the 2023/2024 academic session, including new and returning students.
The total sum of the scholarship donation amounts to N750 million (Seven Hundred and Fifty Million Naira). The announcement was made during Otedola’s acceptance speech at the university, where he outlined his vision and commitment to the educational institution and its student body.
Otedola specified that the scholarship would benefit both returning and new first-year students.
“I hereby announce a scholarship donation to Each returning student of the University and Each new first year student of our University the amount of One Million Naira Each towards the 2023 / 2024 session school fees of Each student. I am told that there are 500 returning students and about 250 new first year students making a total Scholarship donation of N 750 Million (Seven Hundred and Fifty Million Naira). I hope this donation assists the plight of the parents of our students in this difficult time,” Otedola said.
This substantial financial aid aims to alleviate the burden on families affected by Nigeria’s challenging economic climate.
In addition to the student scholarships, Otedola also announced further contributions to Augustine University.
He pledged N140 million for the furnishing of the recently completed Engineering faculty building and another N110 million for the installation of street lights around the campus and a new standby generating set.
This brings his total donation to a staggering N1 billion, aside from his earlier committed N2 billion for the construction of the Faculty of Engineering.
Otedola the activist investor, philanthropist and family man
Femi Otedola is a dyed-in-the-wool and visionary entrepreneur whose energy is directed at transforming enterprises and putting them on the path of growth. A strong leader with a track record of achievements in business and always aiming to make things better and adding value in areas where pioneers have trod.
He was thrust into the public’s consciousness with his foray into the downstream sector of the oil industry when he started Zenon Petroleum and Gas Limited. Zenon disrupted and redefined the standards in the sector and to ensure that his very high standards were met, he also invested in storage, shipping, insurance brokerage and port agency and petroleum retail outlets building a formidable, value-driven presence along the downstream value chain.
In his quest to grow his foothold in the sector, he initiated the purchase of majority shareholding in the then African Petroleum Plc in May 2007 and joined the Board as Chairman of the Board on 25 May 2007.
His vision transformed African Petroleum Plc into Forte Oil Plc. The Company grew in leaps and bounds to become a model of the possibilities inherent in Nigeria, winning numerous accolades in recognition of the successful business turnaround, diversified portfolio, prompt financial reporting, strong corporate governance and investment of choice within the Oil Industry and the Nigerian Stock Exchange.
He divested from the Company when he accepted the offer of the Ignite Consortium led by Prudent Energy Services Limited for his entire shareholding in December 2018 and handed over control upon completion of the transaction in June 2019.
The divestment from Forte Oil Plc and his acquisition of FO Plc shares in Amperion Power Distribution Company Limited, the SPV for the acquisition of controlling shares in Geregu Power Plc led to him facing the Power Sector squarely as the Company’s Executive Chairman. This is in continuation of his long term interest in the Power sector dating back to 2007, when he made the very strategic decision to participate in the Privatization Programme of the Nigerian Government and his doggedness culminated in the acquisition of a majority stake in the 414MW Geregu Power Plant by Amperion Power Distribution Company Limited in August 2013 (a plant which has since been overhauled and improved to a 435MW installed capacity) contributing approximately 9% of the generating capacity available to the National Grid.
He has held several board memberships, including President of the Nigerian Chamber of Shipping and as past Chairman of Transcorp Hilton Hotel, Abuja. He was appointed Member of the Governing Council of the Nigerian Investment Promotion Council (NIPC) in January 2004 and in December of the same year, he was appointed as a Member of the Committee saddled with the task of fostering business relationships between the Nigerian and the South African Private sectors.
He was a member of the National Economic Management Team under the Chairmanship of Former President Goodluck Jonathan from September 2011 to May, 2015 and The Honorary International Investors Council under the leadership of Baroness Lynda Chalker. He is currently a member of the revered National Peace Committee.
Femi Otedola was further recognised for his immense contributions to the growth of the Nigerian economy with the conferment of the prestigious National Honour of “Commander of the Order of the Niger – CON” by Former President Goodluck Jonathan in May 2010.
A philanthropist with deep involvement in educational causes at all levels via the Sir Michael Otedola Scholarship Awards Foundation, he has continued to demonstrate his passion for his Epe community in particular and Nigeria in general, committing huge financial resources to the sponsorship of promising but financially disadvantaged students.
Femi Otedola is the current Chancellor of Augustine University in Ilara, Epe, Lagos State.
He is a Vice President of Save the Children, a UK based charity. His invitation to the Group is a testament to his philanthropy evidenced in the ₦5 billion donated to Save the Children’s course in Nigeria.
An accomplished family man, his children are charting varied endeavors and making a name for themselves in arts, entertainment, fashion and business. Indeed, the fruits are not falling far from the tree.
He has distinguished himself in business, leadership and philanthropy.
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