Despite the slow recovering of the stock market, Oando Plc has taken the bulls by the horns to spearhead the recently introduced book building in the Petroleum marketing sub sector of the Nigerian Stock Exchange (NSE) by way of offer for sale.
Book building was introduced by the Securities and Exchange Commission (SEC) in 2009 to enhance fund raising in the the capital market
Flour Mills of Nigeria Plc was the first to execute book building for its N35 billion Series 1 Senior Unsecured Bond Issue under a N70 billion debt issuance programme last year, following clearance received from the Securities and Exchanges Commission (SEC).
The company issued a N35 billion in respect of the first tranche, at an indicative coupon range between 10 per cent to 12 per cent.
Book building is a process of price and demand discovery by which an Issuing House/Book Runner, attempts to determine at what price a public offer should be made, based on demand from qualified institutional and high net worth investors.
Meanwhile, Oando has received approvals from the Nigerian Stock Exchange (NSE) to float an offer for sale of 171,500,000 ordinary shares of 50 kobo each at a price to be determined through Book Building.
Though some stakeholders are wondering why Oando is coming out with this offer when the stock market has not significantly improved. Stock brokers had remarked that there was no good time to float any offer, noting that the paramount thing in an offer is what the investing public stands to gain.
According to them, “ a good wine need no bush or introduction. Oando is a good offer considering its pedigree in the Nigerian capital market.”
With its history of performance, and strategy for a bigger future, Oando Marketing is indeed ready for the NSE. Stockbrokers also believe the market is for the bold and for those with superior business case and growth fundamentals. With Pension Fund Administrators’ (PFAs) liquidity and discerning investment profiles, the capital market is capable of smart equity investment in strong brands and market leading players such as Oando Marketing.
Vanguard gathered that the offer for sale would be presented at a discount which is yet to be announced by the Issuing House.
It was gathered that the offer is part of Oando Plc’s initiative to diversify its operation and make Oando Marketing an entity of its own that would eventually be listed on the Exchange.
The company’s Board has concluded to divest 49 per cent equity from Oando Plc. The sale of up to 49 per cent of the Nigeria’s biggest fuel retailer is part of Oando’s plans to provide a platform that would make its marketing division very competitive with its competitors in the downstream sector and broaden investment options for its shareholders and investors” a source added.
By transforming into Oando Marketing (OML) Plc and subsequent listing on the NSE, the company would be left to stand alone at the stock exchange and would be assessed by investors and other market analysts on the basis of its fundamentals.
Furthermore, the implication of the listing would mean that subsequent performance of the company would now serve as the benchmark for those who want to invest in the company especially on the long term.
Oando Marketing believes its assets portfolio and efficient distribution system set it apart from its competition and better position the company for continued domination of the downstream sector of the Nigeria oil and gas industry.
Its over 500 retail outlets and strategically located terminals in Nigeria and the West African sub region remain a reliable source of fuels for millions of households, motorists and industries in the region.
It continues to gain market share for its made-in-Nigeria range of lubricants brand, Oleum.
The products which are internationally certified and benchmarked against global standards are source of the Oando Marketing high-margin revenue driver and one of its multiple earning platforms. The company expects to grow revenues from its LPG initiatives as well.
There is currently a bold move at prompting local utilaisation of LPG as a strategy to drive sales through mass market targeting. It has introduced an appealing innovation of retailing the product through pump dispensing according to the customer’s need. This is known as the Pay-As-You-Gas. This initiative helps the consumer to access the fuel within the comfort of individual purchasing power.
It is also injecting hundred of thousands of LPG cylinders aimed at encouraging increased utilization in a move to encourage switch from firewood that is renowned for its negative environmental impact. Unfortunately, Nigeria currently lags behind other West Africa’s countries such as the less populated Burkina Faso in the utilization of LPG as domestic fuel. Oando’s intervention is seen by industry watchers as own significant attempt at changing the tide.