BY PETER EGWUATU
Indication has shown that Oando Plc is on the verge of daring the stock market following the application submitted to the Nigerian Stock Exchange (NSE) for approval to float a public offering as a move to partially divest 49% of its wholly-owned equities in the marketing arm.

The company, Oando Marketing, as gathered would be eventually listed as an independent entity in the petroleum sub sector of the NSE.

Vanguard gathered that Oando management has submitted application to the 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.
Stockbrokers have expressed optimism that the NSE will definitely approve the offer even as the market has been on bearish trend in recent weeks.

Brokers also believe that the market is meant for the bold and for those with superior business case and growth fundamentals. With Pension Fund Administrators’ (PFAs) liquidity and discerning investment profiles, the offer is somehow guaranteed of success, especially with equity investment in strong brands and market leading players such as Oando Marketing. “The PFAs and other investments power houses are capable of leveraging the boldness of the Oando Group to reawake the confidence of apathetic investors” Brokers added.

Notwithstanding, some stakeholders are still wondering why Oando is coming out with this kind of offer as the market has not been able to sustain the recovery growth witnessed at the beginning of the year.

The Oando is the fourth most priced shares at the NSE and has been marked down at N65.95 per share by the NSE following the company’s intention to float an offer. This has been the normal practice at the NSE to freeze a price whenever a major change is about to happen in any quoted entity.

It would be recalled that despite the global recession that hit the capital markets at all frontiers, leaving investors gasping at the magnitude of their loss, Oando, in February 2009 was at the market daring the bulls to come out of their apathy. While many businesses believed the stock markets were still leaking their wounds, Oando pulled a terrific result raising N21 billion and yet had to return funds to many who helped overshoot the Right Issue offer by 26%.

Stockbrokers believe the move puts the NSE on a confident footing and boosted investors performance thereafter.

Last year, it was gathered that Oando will partially divest 49% of its wholly-owned equities in the marketing arm and eventually list the company independently on the ‘Petroleum Section’ of the Exchange.

This move has been hailed by stockbrokers as an opportunity for shareholders of Oando and new entrants to diversify their investments and enjoy multiple streams of returns.

A source close to Oando said, “The company is better positioned to optimize investment on its business. The company deal in commodities that remain in high demand in the country. It is also diversifying its income streams to include sustained revenues from high margin products such as lubricants and liquefied petroleum gas (LPG), whilst leveraging its scale and spread to drive volume and ramp up our bottom-line, thus enabling it to post superior return on investments year on year.”

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.