Nigeria’s Oil and Gas Company Sahara Group, has revealed that it plans to raise as much as $1.4 billion through a dual listing of its oil and gas unit in London and Lagos along with a debut dollar bond sale. According to Bloomberg, the company needs the money to buy oil blocs in Nigeria as it seeks to ramp up production five-fold to 60,000 barrels a day, said Executive Director Tonye Cole.
Sahara is seeking as much as $600 million in the initial public offering, which may take place within a year, and $800 million through a seven-year bond that should be issued by the end of October.
According to Tonye Cole
“Over the next five years, our target is to be one of the largest indigenous producers in Nigeria, A lot is dependent on the IPO. We started down that road before oil prices collapsed, but we’re still focused on it.”
“We’re looking to raise somewhere between $500 million to $600 million for about 20 to 25 percent of the shares,”
Bloomberg also quotes Tonye Cole as saying that this amount basically values the company at between $2 billion and $3 billion.
This will not be the first time a local oil company will be embarking on a dual listing as Seplat became the first Nigerian company to sell its shares in London and Lagos when it’s completed the listings in April last year.
Seplat share price has however taken a massive nose dive trading at about N226 and 65% down in the kast one year. The bearish share price is related to the drop in oil prices which has since filtered into Seplat’s profits dropping by over 50% in the full financial year of 2014 and by another 66% in the first half of 2015.
Sahara Group is said to own Rak Unity, an oil and gas company listed on the floor of the Nigerian Stock Exchange. Some analysts opine that this may be the vehicle that will be used for the IPO. Sahara Group is also said to own 100% equity in Nigeria’s largest Power Plant, Egbin Power Plant and also bought majority shares in the recently privatised Ikeja Distribution Company also Nigeria’s largest power distribution company.
Sahara Group is known for its ‘crude for product swaps’ in Nigeria. It basically buys crude from the NNPC, processes it at regional refineries such as in Ivory Coast and then sells the products back to Africa’s most populous nation. The Oil Swaps have been laden with controversies in recent past and have been suspended by the current Government.