Femi Otedola on the Prowl Again

We have just heard that Chief Otedola, fresh from the listing of Geregu at the Exchange, has made a major push into Transcorp. You will remember that Transcorp is the company where Tony Elumelu’s Heirs Holdings holds sway.

On these pages, I had congratulated Chief Otedola on his belief in the economy with these investments, which continue to create jobs and give confidence. But then someone reached out and asked, “Edgar, what do you think is Femi’s plan in taking this position at Transcorp?”

I couldn’t answer but what we are seeing is that at about 6%, it is looking like he is today the largest single individual shareholder at the Firm. This is definitely a strategic move and the question lingering in people’s minds especially people in the market are, will this be a move to forge a partnership between him and the existing owners or is there any other motive behind the positioning.

In search of an answer, I went to the books -Transcorp ended the year with gross earnings of N134.7bn, a 21% increase. This growth according to the report was driven largely by their hospitality and power business. They also increased their PBT to N30bn up from N28bn and reported a 150% increase in dividend payout.  All major indices also recorded significant increases.

Now if you see that they play in very strategic parts of the economy, like power, hospitality, oil and gas and with a shareholder base of about 300,000 you will start to maybe get a clearer picture of Chief Otedola’s foray.

But in these things, you will never know because it is usually like a complicated chess game. You only see the moves after they have been made. If I were to advise any serious investor, I would say this is the best time to enter Transcorp, because Mr. Otedola seems to understand our markets better than most people.

Just as I was writing, another report just came in that Mr. Elumelu has increased his holding of the firm through his Heirs Holding which has increased its holdings to about 25.58% giving him a firmer grip of the firm.

It’s looking like we may have to start arranging a ringside seat for this epic struggle which is about to brew. Any which way it goes, it is better for the economy as all these funds are being deployed back into it. Na wa.

Just as this page was going to bed, reports emerged that Mr Otedola had exited his position in Transcorp at multiples of four the price he entered. This was certainly a night of long knives for Tony and his team and what has readily come to my mind is the question most investment bankers are asking in different dark corners – how did Tony leave his flanks this open? Na wa.