Transcorp Power NGX Debut Expands Investors’ Portfolio

Kayode Tokede

Transcorp Power becomes the second Electric Power Generating company to be listed on the mainboard of the Nigerian Exchange Limited (NGX) by Introduction.

In Introduction, the company listing does not have to undergo the book building, underwriting, and public offer process, and no new shares are created; only existing, outstanding shares are sold.

This means Transcorp Power listing by introduction entails that only existing shareholders of the company in this case, its owners trade their already existing shares with anyone who may be interested in buying a piece of the company.

It also provides a platform through which new investors (from the public) can be admitted into the Company, thereby diversifying the existing shareholder base. Listing on NGX also positions the Company for access to a larger pool of capital raising options and an avenue to contribute to the growth of the NGX and the Nigerian capital markets at large.

Since it listed 7.5billon shares outstanding at N240.00 per share on March 4, 2024, the stock market has appreciated significantly, leading to its price heading towards N400 per share on the Exchange.

In terms of market capitalisation, the company listed N1.8trillion when its price was at N240.00, rising to N351.30 per share to bring its market capitalisation to N2.63 trillion as of March 08, 2024.

In its Week-on-Week (WoW) performance, Transcorp Power has appreciated by N111.30 or 46.4 per cent to close at N351.30, while its market capitalisation added N834.75billiion WoW growth.

The company’s stock price in the first week listed on the NGX has witnessed soar demand by investors and it is driven by management behind the company and robust fundamentals amid high return on investment.

Transcorp Power, a subsidiary of Africa’s leading, listed, diversified conglomerate, Transnational Corporation Plc (Transcorp) – is Nigeria’s largest gas-fired power generating station in the country, leading the way in energy generation for millions of people in Nigeria and Africa.

Transcorp Power was founded on September 24, 2012, as Transcorp Ughelli Power Limited (TUPL), having emerged as the preferred bidder during the privatization of the national electricity assets by the Federal Government of Nigeria. TPP is the owner of the 972MW installed capacity Ughelli Power Plant (UPP) at Ughelli, Delta State, Nigeria.

TPP went ahead to surpass the five-year performance target of 670MW set for it in 2013 by Federal Government of Nigeria through the Bureau of Public Enterprises (BPE), by increasing the available capacity of Ughelli Power Plant from 160 Megawatt (MW) to 701MW within a period of four years of taking over the Plant.

In 2023, the Company became the first power generation company to be discharged from post-privatisation monitoring by the National Council of Privatization, having met and surpassed set targets.

The Company is led by a highly committed, balanced, diversified and experienced Board of Directors and management team, working together to strengthen its position as Nigeria’s top power generation company.

What’s driving the fundamentals behind Transcorp Power?

The Transcorp Power has 18 gas turbines of different capacities comprising 12 Hitachi H25 gas turbines of 23.8MW capacity each and six Frame 9EGeneral Electric (GE) gas turbines of 105MW capacity each.

Whilst installed capacity has remained same in the past few years, Transcorp Power has been able to steadily improve on its capacity utilization rate. In 2023, the Company’s utilization rate stood at 78per cent (5-year high).

Transcorp Power revenue has grown significantly over the past five years, driven by a surge in energy delivery and capacity charge, coupled with the lucrative expansion into international markets.

The company between 2019 and 2023 has grown its revenue by 154.06per cent to N142.12billion from N55.94billiion, while net profit rise to N31.1 billion, representing an increase of 657 per cent in five years from N4.1 billion reported in 2019.

The breakdown of revenue showed that Transcorp Power in 2019 declared N55.94billon revenue and it increased to N65.12billion in 2020. In 2021, revenue stood at N74.33 billion, N90.35billion in 2022 and N142.12billion in 2023.

The breakdown further revealed that Transcorp Power generated 82.2per cent of its revenue from local customers, and 17.8 per cent from International customers.

The N55.94billion revenue in 2019 was for local customers and in 2020, the company’s reported N65.12billion  was shared 3.3 per cent international customers and 96.7 per cent local customers.

In 2021, international customers contributed 12.4 per cent while local customers contributed 87.6 per cent out of the total N74.33 billion revenue.

However, in 2022, the company generated 87.2 per cent of its revenue from local customers and 12.8per cent international customers. It closed 2023 with 82.17 per cent revenue from local customers and 17.83 per cent international customers.

 The Company has sustained and grown its EBITDA margins, thereby strengthening its pedigree as one of the leading power generation companies in Nigeria. EBITDA margins has increased from 36.7per cent in 2019 to 48.8 per cent in 2023.

Management driving Transcorp Power, other subsidiaries

Transcorp Power listing on the NGX is a reflection of the Group trust in the Nigeria capital market amid listing of other subsidiaries such as Transcorp Hotel Plc, and Transcorp Corporation Plc, all chaired by Mr. Tony Elumelu.

Elumelu, who is proponent of Africapitalism, a renowned turn-around entrepreneur, is also Chairman of United Bank for Africa (UBA) Group and Heirs Holdings.

As of March 8, 2024 the three contributed about N4.36 trillion to market capitalisation amid impressive corporate earnings and robust dividend payout to shareholders.

The group and its subsidiaries are playing critical role in key sectors such as the Power, Hospitality Energy, and agribusiness.

He stated that the purpose of listing on NGX is to improve lives and transform society.

“We want this wealth creation to go round. We want to help improve the lives of our people and that is the reason we invested in the power sector. We know that access to electricity is critical in powering Africa out of poverty, in creating jobs, making hospitals to operate, helping schools to function and helping to industrialize Nigeria.

“We can’t industrialize Nigeria if we do not fix access to electricity. For us at Transcorp, it is not about wealth creation, but consistent with our philosophy of Africapitalism which is about creating economic opportunities for all of us,” Elumelu stated during the Transcorp Power listing on NGX.

Elumelu had insisted that for the power sector in Nigeria to work well, there is need to increase generation, fix gas supply to generating companies and make sure that the transmission lines are capacitised to evacuate the power.

The listing of Transcorp Power is a strong indication that Elumelu is optimistic about the Nigerian capital market. The market over the years has supported his companies in raising capital and reshaping its brands. 

Transcorp Power ’s Value Proposition

The MD/CEO, Transcorp Power, Engr. Peter Ikenga stated that the company presents a unique opportunity in Nigeria’s power generation sub-sector, which is pivotal to the country’s economic growth.

According to him, Transcorp Power is a leading thermal power generating company in Nigeria, accounting for seven per cent of Nigeria’s power generation capacity, yet currently generates 10per cent of Nigeria’s power with existing assets, with capacity to contribute further.

Ikenga noted that the company solid operational track record, stressing that the quick-ramp up in available capacity to 701MW from 160MW in 2017 and consistent contribution to the national grid depicts plant reliability and efficiency.

He expressed further that Transcorp Power aims to be a leading power company with an annual revenue in excess of N500billion by 2031,  highlighting key pillars such as : diversified energy mix including renewables and off-grid solutions,  capacity recovery & plant expansion, increased footprint in international electricity markets and significant market share in Nigeria.

On key growth drivers, he added that, “We have executed firm contracts with a number of gas suppliers. The plan is to ensure we continuously engage our gas suppliers to ensure delivery of quality gas as well as identify alternative back-up sources to continuously maintain our generation capacity.

“Extensive engagement with TCN towards resolving several transmission challenges which are affecting generation and evacuation capabilities.”