The company has an implied valuation of $579 million.
Geregu Power Plc, a top-performing power-generating company majority owned by Nigerian billionaire Femi Otedola, has finalized plans to list a total of 2.5 billion shares on the Nigerian Exchange via introduction to the Main Board on Oct. 5.
The disclosure comes nearly three months after Geregu Power completed the issuance of its $96.3-million unsecured corporate bond as part of its effort to strengthen its infrastructure and capacity through the strategic acquisition of power generation facilities in the industry.
Geregu Power will list a total of 2.5 billion ordinary shares of 50 kobo ($0.345336) each at a share price of N100 ($0.231), making it the first successor company from the electricity companies privatized in Nigeria in 2013 to be listed on the exchange.
Information made public by the company places an implied valuation of N250 billion ($579 million) on the Otedola-owned firm.
According to insider sources with knowledge of the listing, the company’s valuation could rise significantly following the listing on Wednesday, as investment bankers, hedge funds, and private investors vie for stakes in the power generation firm, which is majority owned by Otedola.
Geregu Power, which began operations in 2007, is a spin-off subsidiary of the now-defunct Power Holding Company of Nigeria.
It was acquired in 2013 by Otedola through one of his companies, Amperion Power Distribution Company, after the privatization of the power sector. Otedola owns 95 percent of Amperion.
Otedola, who has been strategic with his investments over the years, profited from the oil and gas industry’s robust valuation between 2007 and 2019. He sold his equity positions in Forte Oil (formerly African Petroleum), a major oil marketing company, to people and companies connected with Nigerian energy tycoon Abdulwasiu Sowami for $200 million. Forte Oil was later renamed Ardova Plc.
Shares in the petroleum marketing company surged from less than N5 ($0.1156 million) in 2007 to an all-time high of N300 ($0.694) in 2016. This increased the value that Otedola obtained from the sale of the firm.
During the time when he was majority owner of Forte Oil, its revenue and earnings also increased, contributing to its valuation.
Otedola has seen impressive returns on his investments since 2019, when he announced plans to shift focus to power generation with a projected investment of up to $1 billion in Geregu Power in a move to capitalize on the business’s gains. This is especially true of the dividends that he has received from Geregu Power.
The board of directors of Geregu Power declared total dividends of N49.8 billion ($115 million) over the previous two years.
This equates to dividend payouts of N37.5 billion ($86.7 million) and N12.3 billion ($28.4 million), respectively, for its 2020 and 2021 fiscal years.
Source: Billionaires Africa