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Otedola earns N74.05bn after Afreximbank deal, Geregu eyes trillionaire stock list



FIRST BANK: Femi Otedola’s disruption bringing more losses than gains for shareholders?

The founder of Geregu Power Plc, Femi Otedola, saw his investment value in Geregu rise by 13.83 per cent after selling five per cent of Geregu shares to Africa Export and Import Bank (Afreximbank).

Afreximbank acquired the five per cent shares on Tuesday through its impact development arm, Fund for Export Development in Africa (FEDA).

Ripples Nigeria previously reported that both FEDA and Geregu were in talks to secure funding in exchange for a substantial stake in the electricity company.

The investment is part of Afreximbank’s plan to contribute to the development of the power sector in Nigeria, where more households depend on alternative power due to unstable electricity supply from the national grid.

This publication gathers that other minority shareholders and the investing public were informed of the acquisition in a document dated February 21, 2023.

Prior to the announcement, Geregu’s stock had been trading flat at N224 per share since Friday, February 17, 2023, to Tuesday.

Otedola’s total investment value stood at N535.11 billion for three days, as the company experienced low demand from the capital markets for its shares.

However, a day after the announcement, Geregu’s share price soared as the finalisation of the deal between the firm and Afreximbank boosts the capital market’s confidence in Otedola’s company.

As a result of renewed confidence and high demand, Geregu’s stock value surged by 13.83 per cent to N255 per share on Thursday, up from N224.

The surge handed Otedola a N74.05 billion gain, as the increase in Geregu’s stock value raised the billionaire’s investment in the electricity firm from N535.11 billion to N609.17 billion.

Read also:Nigeria’s capital market rebounds from Tuesday’s losses, Geregu, John Holt among top gainers

Ripples Nigeria’s analysis of the company’s stock market activities in the last four days showed that Geregu’s shareholders raked in a total of N77.70 billion, with Otedola accounting for 95.5 per cent of the gain due to his majority stake.

Is Geregu heading towards the trillionaire club?

In October 2022, Geregu listed 2.5 billion shares on the Nigerian Exchange Limited (NGX) at a worth of N100 per share.

Within five months, demand for the company’s shares has pushed up its stock value by 155 per cent, as the cost of the share increased to N255 as of Thursday, February 23, 2023.

During this period, Geregu’s total valuation in the stock market increased significantly to N637.50 billion, from N250 billion, making it one of the best-performing equities in the NGX in the last five months.

Geregu’s market valuation rose by N387.50 billion within five months, a bit more than the figure the company needs to join the trillionaire equity club in the capital market.

If Geregu replicates the last five months’ performance, it might just land itself on the trillionaire list, however, it depends on the capital market’s confidence in the firm’s future growth prospects, as the gain so far could trigger a sell-off among profit-takers.

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