By Peter Egwuatu
Oando Plc is on the verge of creating another opportunity for shareholders to have multiple dividends as it gets prepared to diversify its 49 per cent of its wholly owned equities in the marketing arm.
The company has gotten approval from the Nigerian Stock Exchange (NSE) to float sale of 171,500,000 ordinary shares of 50 kobo each at a price to be determined through Book Building.
It was gathered that arrangements for the proposed offer have reached an advanced stage and may likely be open to the investing public on or before the end of this week. or early next week.
The investing community seems excited about news that Oando Plc, one the Nigeria’s largest integrated energy solutions company is planning a partial divestment of 49 per cent stakes in its marketing arm, Oando Marketing to prospective investors.
The sale of up to 49 per cent of the petroleum marketing re is said to be part of Oando’s enterprise refocusing to transform itself into a major upstream energy company in Nigeria.
Stockbrokers and capital market analysts who commented on the development described it as a ‘win_win’ situation for existing shareholders of the company as well as a window of opportunity for prospective investors who have been yearning for a share of the Oando cake. This development is more interesting given the background that the offering prices are always at a discount to the actual market price.
The strategy is also believed to offer long_term investment option through the company’s upstream business, Oando Plc, affording investors the opportunity to maximize risks through diversification.
After the divestment and sale of shares to the public, Oando Marketing as gathered will be listed separately on the Nigerian Stock Exchange (NSE), thus enabling both Oando Plc and Oando Marketing to have an independent peer_to_peer comparison.
This is expected to alter the current classification of companies as the NSE may have to create a different category for Oando Plc, the oil exploration and production business.
According to an investment analyst based in Lagos, “The listing of Oando Marketing will definitely create value for shareholders particularly those who missed an opportunity to get on board during the last Rights Issue by the Group. It is also a good way of leveraging on capital appreciation and returns by those who will be lucky to be shareholders in the two companies.”
An analyst at Source Capital, Kwekwu Brown, said: “The deal is good for existing shareholders since they would have the opportunity of having some stakes in the upstream sector, which is lucrative in the long term as well as the downstream, which is matured with high returns on investment. It is a good opportunity for prolific investors to benefit good returns from the two blue chip corporate.”
However, he is of the opinion that the pricing of shares of the marketing arm would determine the value that prospective investors stand to get by investing in the company. In this regard, market analysts opined that the pricing should necessarily offer some incentives to new investors.
In the 2009 financial result, Oando Marketing recorded sales in excess of N149 billion and posted profit of N4.9 billion. The marketing business generates a cash flow of N640 million daily in sales and has been delivering profit yearly to the group under the leadership of Omamofe Boyo, who also doubles as the Group’ Deputy Managing Director.
Those who are privy to the development say a new window of opportunity has been thrown open to shareholders by the alternative investment options, all from a Group with proven track record of impressive results in spite of challenging economic environment.
For the marketing business, the divestment strategy will provide a credible investment option for shareholders. Towards its expansion drive, Oando Plc has progressed in a strategy of diversifying its interests and has achieved results in this regard.
Specifically, the Group had diversified into the gas distribution business and has built a 100 kilometres of pipeline in Lagos and another 128kilometres in the South East is due for inauguration by the end of the year. The company also moved into the upstream services business and has the largest swamp rig fleet company in Nigeria. The Group’s exploration and production business is the first indigenous oil and gas company to have equity in a producing deep offshore asset.
These businesses have established the Group in downstream, midstream and upstream in the oil industry.
Key industry operators observed that opportunities in the upstream business for indigenous companies open up with the ongoing reforms in the industry.
The Petroleum Industry Bill (PIB), now in the National Assembly, is expected to give preference to Nigerian companies in buying into a substantial amount of proven reserves that have been held for 30_40 years by foreign oil companies and now have to be released.