Singapore’s TEMASEK is Model For MOFI Management of FG Assets – Elumelu

Singapore’s TEMASEK is a good model for the Ministry of Finance Incorporated (MOFI) to look at as it builds up capacity to manage Federal Government assets, according to Tony O. Elumelu, CFR, Chairman of Heirs Holdings Group.

Elumelu, who is also the Chairman of Transcorp Group, UBA Group and Founder, The Tony Elumelu Foundation, was speaking today (Feb 20th) at the Public Wealth Management Conference organised by Ministry of Finance Incorporated.

The theme of the conference, declared open by the Vice President of Nigeria was Championing Nigeria’s Economic Prosperity.

In the bid to position MOFI as the strategic institution that will support the Federal Government’s efforts to address economic challenges and drive growth in the Nigerian economy, Elumelu recommended TEMASEK of Singapore as a model.

Elumelu, said there should be no rush to see immediate profits; but MOFI must have that mindset to fully unlock the value contained within the state-owned assets. He re-iterated that the Heirs Holdings Group stands ready to support and partner with MOFI in whatever way to ensure long-term success.

“First set the strategic intent, prepare the milestones, know how you will be judged, and then execute, execute, execute – with discipline and always with that strategic intent in focus,” Elumelu said.

“When I was told of the subject, I instantly drew a parallel with TEMASEK in Singapore. TEMASEK started out in 1974 with the same aspirations as MOFI. In 1974, following independence from the British, the Singaporean government found itself as the owner of a variety of new state-owned enterprises. The Singaporean Government felt that it was necessary to separate governance from business management,” Elumelu said.

This stemmed from the principle that it was not the business of the government to operate the businesses it owned.

This principle led to the establishment of Temasek in 1974 to own and manage the assets held by the Singapore Government.

The arrangement allowed the government to focus on its core role of policymaking and regulations.

Today, Temasek has investments in the strategic sectors of its economy to unlock significant value: Transportation, industrial, financial services, technology, telecommunications, real estate and consumer goods.

Temasek typically owns significant stakes in companies, often with a focus on strategic investments that align with Singapore’s economic development goals. Temasek also actively manages its investments, engaging with portfolio companies to drive growth and value creation.

Meaning that they are not a passive investor that sits back but more like a Private Equity firm that works closely with management to unlock value.

“We need this approach in Nigeria. Temasek was established with state-owned assets worth $300 million, today those assets are now worth approximately $300 billion,” Elumelu noted.

Turnaround Success in the Heirs Holdings Group

Elumelu went down memory lane about the turnaround success in the Heirs Holdings Group.

“Our expertise is in unlocking the value in the assets we hold, and our track record speaks for itself,” Elumelu said.

The turnaround of a defunct Crystal Bank birthed into Standard Trust Bank, which is now part of today’s United Bank for Africa (UBA).

This was not a state-owned enterprise but the same principles for turnaround occurred here, according to Elumelu.

“We had a clear vision from day one of what we wanted to achieve in the financial services industry. We set out clear goals which we labelled our strategic intent and worked assiduously to ensure we met them.”

Today, UBA Group operates in 20 African countries, the UK, France, the UAE and the USA. It is the only African bank with a deposit taking license in the USA.

In 2010, following Elumelu’s retirement as the CEO of UBA, and in looking for new opportunities and ventures, the Heirs Holdings Group, his family’s investment firm acquired Transcorp Plc.

At the time, Transcorp was formed to lead the industrialisation of Nigeria. The only asset Transcorp Group had back then was the Transcorp Hilton, Abuja.

Today, Transcorp plays in the hospitality, power (both in generation and distribution) and in the oil & gas sectors.

In Power, Transcorp acquired the 972MW gas-fired Ughelli Power Plant and ramped up its generations from 160MW to 701MW within four years of taking over the plant.

Transcorp’s Ughelli Power Plant is the first privatized power company to be discharged from post- privatization monitoring having surpassed all set targets by the BPE and the National Council on Privatisation.

Transcorp Hotels has also been issued a Certificate of Discharge by the National Council on Privatisation.

“We are confident that once we fix the issues of gas supply in Nigeria, we will be able to generate enough electricity to significantly power our country’s industrialisation, Elumelu said.

Lessons learnt

Elumelu said the Heirs Group has partnered with the FG to unlock the value of state-owned enterprises and we have shown how private sector efficiency translates into profitability and increased prosperity.

From that experience there are certain lessons that one can learn, as there are key success factors to note to truly unlock the value of FG state-owned assets, according to Elumelu.

“In our group, we are guided by the philosophy of Africapitalism, investing for the long-term, not the short-term, in strategic sectors of the economy that not only create profit but also create social wealth for the communities we operate in. It is the philosophy that drives our business, but it is also what drives the Tony Elumelu Foundation – why I have catalysed thousands of young entrepreneurs across Africa – why we have funded, trained and mentored them, to create a new generation fo Africapitalists.”

Some of those lessons according to Elumelu include:

Leadership Capacity – Assemble the best in the industry who possess a turnaround mindset to transform the state assets and set performance targets for them.

Create a high-performance environment.

Culture of Excellence – You have to have an improvement mindset, a hunger for operational excellence.

Corporate Governance – Build strong governance structure including a strong board with seasoned private sector professionals and an empowered executive management team.  Balance this with non-executives, who bring objectivity and experience.

Risk Management – Continuous review of the operating environment to identify and mitigate emerging portfolio risks.

Non-interference in management.

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