First Bank shares drop -3.19% as govt selects Otedola’s firm in bid for power plants

First Bank Holdings shares fell by -3.19 percent after the Bureau of Public Enterprises (BPE) announced billionaire businessman Femi Otedola’s investment vehicle as one of the pre-qualified 16 firms for the privatisation of five National Integrated Power Projects (NIPPs) on Thursday.

The BPE selected Amperion Power Distribution Company Limited, owned by Otedola in the bid for five power plants – Geregu Generation Company Limited, Benin Generation Company Limited, Omotosho Generation Company Limited, Calabar Generation Company Limited, and Olorunsogo Generation Company Limited.

Ripples Nigeria had reported that Otedola sold N7.96 billion worth of shares in preparation for the power plants bid, almost nine months after he first bought 2.71 billion shares to become First Bank’s majority shareholder in H1 2021.

The investment earned him a profit of N3 billion, which is a little lower than the amount he spent to acquire the Geregu Power Plant in 2013.

READ ALSO: Remi Babalola resigns as First Bank Holdings chairman

Otedola’s history affecting investors’ confidence!

Following the announcement, the FBN Holdings stock value dropped from N10.95 kobo to N10.6kobo per share, extending the company’s bearish run that was triggered by Otedola’s sell off on June 8. It traded flat on Friday.

This week, the company’s share depreciated by -9.43 percent from last week’s N11.6kobo per share.

Within five days of trading, FBN market capitalization has dropped by N35.89 billion from N416.38 billion to N380.49 billion.

Otedola’s sell-off had also contributed to the company failing to make Ripples Nigeria’s best performing bank stocks for H1 2020. His sell off shows that the billionaire may be planning to use his FBN investment to acquire the power plant.

And with the capital market not knowing how far Otedola is willing to sell his shares in FBN Holdings to fund Amperion’s power plant acquisition plan, investors confidence has dropped towards the bank’s stock, considering he sold his entire stake at Forte Oil to acquire Geregu Plant.

With uncertainty surrounding Otedola’s future investment in FBN, the bearish sentiment is likely to continue until the deal for the power plant is secured, bearing in mind that FBN stock equally entered a bullish run in Q4 2021 after the management disclosed publicly that Otedola had bought significant shares in the bank.

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