Move over, Oprah Winfrey – there is a new richest black woman in the world. And she’s Nigerian.

The latest Forbes list, a credible rating scale for rich people in the world has listed Folorunsho Alakija as one of the richest women in Africa. Folorunsho Alakij was one of the two women who made the list, ranked 24th with a net worth of $600 Million from her oil business.

Meet Folorunsho Alakija, a Nigerian billionaire oil tycoon, Fashion designer and philanthropist who is worth at least $3.3 billion- contrary to a recent Forbes Magazine ranking which pegs her net worth at only $600 million.

Alakija, 61, was born into a wealthy, polygamous Nigerian family. She started out her professional career in the mid 70s as a secretary at the now defunct International Merchant Bank of Nigeria, one of the country’s earliest investment banks. In the early 80s, Alakija quit her job and went on to study Fashion design in England, returning to Nigeria shortly afterwards to start Supreme Stitches, a premium Nigerian fashion label which catered exclusively to upscale clientele.

The business thrived, and Alakija quickly made a tidy fortune selling high-end Nigerian clothing to fashionable wives of military bigwigs and society women.

Oil Prospecting License

In May 1993 Alakija applied for an allocation of an Oil Prospecting License (OPL). The license to explore for oil on a 617,000 acre block – (now referred to as OPL 216) was granted to Alakija’s company, Famfa Limited. The block is located approximately 220 miles South East of Lagos and 70 miles offshore Nigeria in the central Niger Delta.

This was in 1993. Many wealthy Nigerian businessmen and military bigwigs who had been allocated oil blocs by the military administration at the time had no clue as to the technicalities in operating an oil block, so many of them typically acquired OPLs, and then flipped them off to international oil companies for substantial profits.

But Alakija was intelligent. She had no expertise or experience in running an oil field, but she decided not to sell off her license. In September 1996, she entered into a joint venture agreement with Star Deep Water Petroleum Limited (a wholly-owned subsidiary of Texaco) and appointed the company as a technical adviser for the exploration of the license, transferring 40 percent of her 100 percent stake to Star Deep. Subsequently, Star Deep sold off 8 percent of its stake in OPL 216 to Petrobas, a Brazilian company. Folorunsho Alakija and her family owned 60 percent.

Nigerian Government Forcefully Acquires Stake In The Block

Star Deep Petroleum carried on with exploitation of the oil field. In 2000, the first appraisal well was confirmed to have recoverable reserves in excess of 1 billion barrels of oil equivalent. When this was discovered, the Nigerian government, led by Olusegun Obasanjo immediately ordered that a 40 percent interest in OPL 216 be allocated to the Nigerian National Petroleum Corporation (NNPC) under the Back-in-Right Regulation of 2003 which gives the Nigerian government participatory rights in any OPL or OML. You can read more about this back-in-right regulation in detail here.

This would leave Famfa Oil with a 20 percent stake. This was in 2000, and the government did not pay Famfa a dime for the stake. In 2003, Famfa applied for a conversion from an OPL to an OML, and in 2004 the request was granted. OPL 216 became OML 127.

But the Nigerian government was not content with its 40 percent stake in Famfa. In 2005, the government led by General Olusegun Obasanjo forcefully acquired a further 10 percent stake in OML 127.

Folorunsho Alakija immediately went to the courts to challenge the government’s forceful acquisition take a 50% in the license. It was a lengthy court battle which lasted for several years, but in May 2012, the Supreme Court voided the government’s acquisition of a 50 percent stake in OML 127 and subsequently transferred the 50 percent stake back to Famfa Oil. (Read about Famfa’s victory here).

The Nigerian government tried to appeal the Supreme’s court decision, but the case has been dismissed- a victory for Famfa Oil which sees the little-known oil company owning a 60 percent in OML 127, which is one of Nigeria’s most prolific oil blocks.

Valuation Of OML 127

Daily production at OML 127 currently stands at 200,000 barrels per day. When the Nigerian government, through its wholly-owned petroleum company, NNPC, was trying to justify its forceful acquisition of a 50 percent stake in OML 127 at the Supreme court, the Government admitted that if Famfa Oil owned a 60 percent stake in the OML, the company stood to earn $10 million on a daily basis (after taxes and other exploration costs have been settled). The government’s argument at the Supreme Court can be found through this link, (item number 23).

alakija1So how much is a 60 percent stake in OML 127 worth?

Comparator: In July 2012, Royal Dutch Shell agreed to sell its 45 percent stake in OML 30 for $850 million to Heritage Oil and Shoreline Energy.

According to Fool.co.uk, OML 30 currently produces 35,000 barrels of oil per day.

So, if 45 percent of a 35,000 bpd-producing oil bloc is $850 million, 100 percent of the same bloc = $1.88 billion i.e 100/45 x $850 million

If a 100 percent stake in a 35,000 bpd-producing oil bloc is $1.88 billion, by the same logic, a 100 percent stake in 200,000 bpd-producing oil bloc is worth $10.74 billion i.e 200,000 bpd/35,000 bpd X $1.88 billion

Folorunsho Alakija’s 60 percent stake in a $10.74 billion oil well is worth $6.44 billion.

Technically, her 60 percent stake in OML 127 is worth $6.44 billion.

Another comparator: In November 2012, French oil group Total announced that it was selling a 20 percent stake in its Nigerian offshore oil field to China’s Sinopec in a $2.5 billion deal. The block in question, OML 138 is a 180,000 bpd facility.

So, if a 20 percent stake in an 180,000 bpd facility offshore block is worth $2.5 billion, the entire block is worth $12.5 billion i.e 100/20 x $2.5 billion. Since a 180,000 bpd-producing facility is worth $12.5 billion, a 200,000 bpd-producing facility is worth $13.8 billion because 200,000/180,000 x $12.5 billion.

Using the Total-Sinopec deal as the yardstick, we could also value OML 127 at $13.8 billion. In that case, her 60 percent stake would be worth $8.3 billion.

But to be conservative, we prefer to go with the lower valuation of $6.44 billion.

On Debt

Ventures Africa reached out to Famfa Limited to comment, but the company declined to divulge any information regarding any long-term or short-term debt. We have no idea on how much debt (if any, the company has), but even if we take the high side, and subtract 50 percent of the value of her stake for debt, that still gives her 60 percent stake in OML 127 a market value of $3.2 billion, which makes her richer than the $2.7 billion Oprah Winfrey is worth according to Forbes Magazine’s last rankings.

Real Estate: $100 million

Folorunsho Alakija also has a real estate portfolio worth over $100 million. Earlier this year, Nigerian and British media announced that Alakija acquired a property at One Hyde Park for $102 million. See media coverage here and here

A source at Famfa Oil who asked for anonymity indeed confirmed that Mrs. Alakija actually acquired the property at One Hyde Park.alakija4

Private Jet

Alakija owns a Bombardier Global Express 6000 which she bought earlier this year for a reported $46 million.

Philanthropy

Folorunsho Alakija is the founder of the Rose of Sharon foundation, a Christian-based charity which gives out small grants to widows.

Personal

Alakija is married to Modupe Alakija and they have four grown-up sons together. She also has a grandchild from her first son. Modupe Alakija, her husband is the Chairman of Famfa Oil. Her sons run the company.

OTHERS ON THE LIST

At par with FolorunshoAlakija on the list is 73-year old former Nigeria Defense Minister, Theophilus Danjuma, with a net worth of $600 million from the oil sector, while 68-year old former banker and Honey Well Group founder, Oba Otudeko, came next with a net worth of $575 million.

Nigerian business mogul, AlikoDangote, and many other new entrants from Nigeria dominate the Forbes Africa’s 40 richest list. Dangote with a net worth of $12 billion, indicates a significant improvement from $10.1 billion in November 2011.According to Forbes, Nicky Oppenheimer of South Africa is once again rated the second richest in the continent, with a $6.4 billion fortune-down $100 million from the previous year.However, the world billionaires list presented Carlos Slim Helu, a Mexican, with net worth of $69 billion as the world’s richest man, while Bill Gates of United States came second with $61 billion net worth.

Others are Warren Buffet of United States ($44 billion), Bernard Arnault of France ($41 billion) and Amancio Ortega of Spain with $37.5 billion net worth coming third, fourth and fifth.

South Africa, the continent’s economic giant, is home to twelve of Africa’s 40 richest, followed by Nigeria, with eleven. Egypt comes next with eight and Morocco has five in the list of the richest men.The Africa’s billionaires list featured Nigerian business mogul Mike Adenuga, who ranks fifth with a net worth of $4.6 billion from his telecommunications and oil companies. Jim Ovia emerged as the 19th wealthiest man in the continent with a net worth of $825 million; Abdulsamad Rabiu, who heads BUA Group is ranked 21st with a net worth of $675 million.

At the 27th position is Mohammed Indimi, with a net worth of $550 million from the oil and gas sector. Mr. O.B. Lulu-Briggs also makes the list on the 31st spot with a net worth of $500 million, also from the oil sector. On the 37th position is Sani Bello, former Nigerian Military Governor from Kano State and a one-time Ambassador to Zimbabwe with a net worth of $425 million.

Standing tall at the end of the list is Hakeem Belo-Osagie, the 57-year old Harvard-trained petroleum economist with an estimated $400 million net worth.

Notable newcomers include the first two women,FolorunshoAlakija of Nigeria, who joined due to her stake in the prolific Agbami oil field; and Isabel dos Santos of Angola, an entrepreneur, investor and daughter of that country’s President.

South Africa’s Desmond Sacco, also debuts as a billionaire, thanks to his shares in mining concern Assore.

Another South African newcomer, Koos Bekker, who since 1997 has turned media group- Naspers into a true multinational firm, taking neither a salary nor a bonus along the way made the list. His $450 million net worth lies mostly in vested Naspers options.