By Peter Egwuatu
Shareholders andÂ stockbrokers have hailed the decision of the board of directors ofÂ Oando Plc to raise fresh capital of N100 billion from the Nigerian capital market, saying it is apt and necessary given the fact that management judiciously ultilised the last money it raised from the market five year ago.
Besides, they expressed satisfaction on the management pro-activeness in making use of the proceeds from the last hybrid offering for the projects stated in the prospectus, as dividends ofÂ performance have started manifesting .
They said theÂ level of demand for the offering to be issued by the company soon would provide an important indication of the degree of interest that has returned to the capital market.
Stockbrokers stated that in 2004, Oando made history as the first non-bank corporate to successfully raise N15billion from Nigerian stock market.Â â€œ Though it intended raising N5 billion but end up raising about N15 billionâ€ they added.
Oando Plc is currently drawing up plans to float a total of N200 billion additional capital raising following approval from the shareholders at the companyâ€™s Annual General Meeting (AGM) in Uyo recently. The directors are currently processing necessary approvals from relevant regulatory authorities in Nigeria and South Africa, the two exchanges the company is quoted, with a view to commencing the fund raising.
The additional funding, according to the board, will be utilised to strengthen the companyâ€™s expansion plans, especially in the mid and upstream oil and gas sector â€“ commission new oil explorations, increase rig fleet and extend gas pipeline network, thereby consolidating its leadership position as sub-Saharan Africaâ€™s foremost integrated energy solutions provider.
Oandoâ€™s Group Chief Executive Officer, Mr. Wale Tinubu, has identified the companyâ€™s diversified business model as a key piece in the future strategy, and revealed plans for it to become the most profitable listed company in the country.
According to him , â€œ:The robustness of our diversified business model, with multiple income streams across the entire energy value chain, will enable us maintain steady profitability and assure investors of guaranteed returns in the short, medium and long term.â€
Specifically, the is the first step in strengthening Oandoâ€™s capital base to support continued business growth even as Tinubu affirmed that the board will soon announce the structure and methodology of the offer and assured that â€œit will be a good mix of various financial instruments to be issued on multiple exchanges to maximize our multifaceted appeal.â€
Femi Adeyemo, Executive Director/ Chief Financial Officer, Oando Plc said, â€œWe expect positive investor response from local and international stock markets to any option we choose to adopt in the execution of this mandate, as investors are well aware of Oandoâ€™s strong fundamentals. We are encouraged by the feedback from our recent local and international roadshows to institutional investors.â€
During the 32NDÂ AGM of the company, financial journalists were taken round Calabar to Uyo to see ongoing and completed projects the company had executed.
The company intend to refinancing isÂ Gaslink Investment, building of small terminals in Calabar to make
Brokers observed that the companyâ€™s pledge to use the proceeds to consolidate its position in the downstream marketing industry and further diversify its revenue streams by leveraging on existing assets has been validated.
In the past five years, Oando has been able to deploy funds realised from the equity sales in profitable businesses. Originally focused on downstream petroleum marketing, the company has become an integrated energy solutions provider with operations spread across West Africa.
Oando has it primary listing on the Nigerian Stock Exchange, and a secondary listing on the Johannesburg Stock Exchange Ltd (JSE). The group has marketing and distribution outlets in Nigeria, Ghana and Togo and other smaller markets along the West African coast.
The companyâ€™s diversification into natural gas distribution for local industries, the acquisition of five oil rigs for drilling campaigns in the Niger Delta, and the emergence of Oando as Nigeriaâ€™s first indigenous company with producing deepwater assets, has positioned the company for continued growth.
Oando has consistently delivered 50 percent year-on-year increase in profitability over the last five years. The additional funds, the directors said, will reinforce its financial structure, bolstering its sector leadership and strengthening subsidiariesâ€™ capital base to take advantage of growth opportunities.
The company recently announced its 2008 year end results, posting 52 percent increase in profit after tax from N5.48 billion in 2007 to N8.34 billion in 2008, while turnover grew by 83 percent to N339 billion from N186 billion in 2007. Gross profit also exhibited similar returns with an 85 percent increase to N40 billion.
It would be recalled that shareholders have at the 32nd Annual General Meeting (AGM) held recentlyÂ in Uyo, Akwa Ibom endorsed the resolution by the board of directors of Oando Plc to raise additional capital ofÂ N200 billion in tranches through any method in the financial markets.
Speaking at the AGM, the trio of Sir. Sunny Nwosu, National Coordinator of Independent Shareholders Association of Nigeria (ISAN), Mr.Francis Orji and Chief Sola Abodorin that spoke the minds of shareholders commended the impressive results of the company during the period under review.
According to them, â€œ We commend the board and management of our company for the dividend we are approving today. This shows that we have started benefitting the fruits of our investments. We commend the company on the improved turnover recording N126.36 billion in 2008 , a rise of 75 per cent above 2007 turnover of N72.3 billion. Profit Before Tax (PBT) also witnessed an increase of 56 per cent over previous year, resulting in a rise in Profit After Tax (PAT) to N895.95 million, 54.6 per cent higher than the previous year. We are also thanking the board for the total dividend of N6.00 per share, having earlier received N3.00 per share as interim dividend. We hope that the company will surpass this next year.â€
Continuing he said, â€œ We are very confident and optimistic that the N100 billion to be raise by way of Bond would be fully subscribed given the growth of the Pension Fund sector. The Nigerian Pension Fund is better organised and has generated a lot of money that are of long term in nature. It is this long term fund that we needed since most of our projects are long term in nature.