Eager Nigerians Seek South African Investors

Posted to the web on: 07 February 2007

Mathabo le Roux

Trade and Industry Correspondent

REPRESENTATIVES of a Nigerian company visiting SA to raise capital following a listing on Nigeria’s stock exchange have ambitious plans to build up a mega-conglomerate by tapping into opportunities offered by key growth sectors in the Nigerian economy.

The Transnational Corporation of Nigeria (Transcorp) listed on the Nigerian Stock Exchange in November last year and has a market capitalisation of about $700m.

The company has embarked on a roadshow, courting corporate investors and investment bankers in the UK, Europe and the US in an effort to raise a further $500m, and is on the South African leg of its tour.

Counting high-profile Nigerians among its management, including Nigerian Stock Exchange director-general Ndi Okereke-Onyiuke as its chairman, the company has plans to invest in high-growth assets in oil and gas, telecommunications, agriculture, trade, hospitality and entertainment.

To this end it had already invested $105m to acquire the Hilton Hotel in Abuja, bought a 51% stake in Nigerian Telecommunications for $500m and acquired the licensing rights for two major oil blocks, it said.

With the Nigerian economy over the past three years growing at more than 6% and economic growth over the next three years projected to grow at more than 5%, Africa’s most populous nation is experiencing an unrivalled consumer boom.

At the same time, the Nigerian government has embarked on an aggressive privatisation programme, which presents massive opportunities to cash-flush companies.

With the Nigerian government looking at building in a requirement for minimum local ownership in strategic enterprises — along the lines of SA’s empowerment legislation — the major challenge for local companies is their lack of capital.

Transcorp wants to position itself to capitalise on these opportunities, says its CEO, Nicholas Okoye.

Some of Transcorp’s more ambitious plans include plans to be invested in the upstream and downstream sectors of the highly lucrative oil industry, and aims to set up a biofuels industry in the west African country.

It also wants to establish a free-trade zone, modelled on Dubai’s highly successful trade zones, which would see companies making use of the hubs, setting up shop in hi-tech shells and receiving tax breaks and competitive costing on logistics and port services.

The group also wants to formalise Nigeria’s booming multibillion-dollar film industry — known as Nollywood, and third only in popularity to Hollywood and India’s Bollywood — by setting up film studios and distribution networks for its product for the millions of Nigerian expatriates living abroad.

But it is also dabbling in electricity, planning to build a power station that could generate electricity for the country, and eventually for the region.

Ultimately, Transcorp wants to serve as a conduit to mobilise the Nigerian diaspora to return to the country and build the skills pool at home, says Okoye.

Transcorp nonexecutive director Gboyeya Oludade, enticing potential investors, said investing in Transcorp would allow them to get a foothold in a company “with its tentacles in very many strategic sectors”.

Projections put revenue at R23bn by 2010, from the current R5bn, and after-tax profit at R2bn, up from the current loss position of R400m.