Stakeholders say Odu’a Investment Company Limited (OICL), one of the largest conglomerate companies in Nigeria, could be turned into a state-owned investment fund that would provide benefits for the economy and citizens of the six states of the South West region.
They made the remark at the just concluded 45th anniversary of Odu’a Investment Company Limited held at the Ikeja Hotels, Lagos.
In a Lecture titled “From Regional Player to Global Powerhouse” the Guest Speaker, Dotun Sulaiman, said that conglomerates have not been rewarded in the capital market like most standalone firms, and that state governors should generate enough money to be put in a fund for the next generation.
Sulaimon, who is Chairman of the Board Absa Nigeria/Chairman of the Board Cadbury Nigeria Plc, there is an urgent need to transform OICL to Private Investment Fund Capital that will generate rate of returns or an Infrastructure Development Fund that will finance capital projects.
“We could transform Odu’a Group into Sovereign Wealth Fund (SWF), we all know what that is. Norway SWF is enough to make each citizen a millionaire. We need to move from an operating entity to an aggregator of capital,” said Sulaimon.
A sovereign wealth fund is a state-owned investment fund composed of money generated by the government, often derived from a country’s surplus reserves. SWFs provide a benefit for a country’s economy and its citizens.
The funding for a SWF can come from a variety of sources.
Popular sources are surplus reserves from state-owned natural resource revenues, trade surpluses, bank reserves that may accumulate from budgeting excesses, foreign currency operations, money from privatizations, and governmental transfer payments.
Norway manages a $1.4 trillion wealth fund, money it makes from investment from surplus revenues from the government petroleum sector.
Sulaimon explained that Warren Buffet’s Berkshire Hathaway headquartered in Nebraska United States is successful and has been consistently so because it has a mix of controlled and non-controlled businesses and is able to allocate and deploy capital to where it makes the most sense based on the business’s durable competitive strengths, the capabilities and character of its management and price.
“In its portfolio, Berkshire owns large stakes in companies like Apple, Bank of America, Coca Cola, American Express, KraftHeinz, Verizon, Chevron, Moodys among several top corporate names and brands,” said Sulaimon.
“This raises yet another question: won’t It be nice if OICL owns 10% of Interswitch, 5% of GTb, 5% of Access Bank, 5% of Dangote cement, 10% of Nigerian Breweries/Heineken, 5% of Airtel 2 % of MTN, 20% of Flutterwave, 5% of Seplat rather than 100% of WEMABOD, Ikeja Airport Hotel, Premier Hotel, Cocoa House or Western House?” he adds.
Experts say it is logical for stewards of the company to diversify into investment that will yield higher returns than putting money in moribund entities.
Odu’a Investment Company Limited was incorporated in July, 1976 to take over the business interest of the former Western State of Nigeria, now Oyo, Ogun, Ondo, Osun and Ekiti States of the Federal Republic of Nigeria.
In his remarks, Chairman, Board of Directors of the company, Dr. Segun Aina, said Odu’a Investment Company Ltd is being transformed into a lean non-operating investment holding company to enhance transparency, focus on investment management and sustainability, traverse a path of maximum impact, and leverage on the models that have succeeded in similar institutions across the globe.
“The next four years will be foundation years for creating an impact-driven organisation. Our targets for Odu’a Investment over the next 4 years are audacious in terms of social impact, growth in revenue and returns on assets with various asset optimisation programmes planned. Despite the obvious challenges in the macro economy, we are optimistic that with the support of everyone present here and other stakeholders, we will over deliver,” said Aina.
“By the way, we plan to upgrade and fine-tune our corporate social responsibility efforts, and we have established an Odu’a Investment Foundation which will be supported by Odu’a Investment and its partners to selectively intervene in healthcare, education, youth development, and allied matters,” summed Aina.