Nigerian Billionaire, Femi Otedola has completed his divestment from Forte Oil Plc after receiving full payment for the sale of the company to Prudent Energy Services Ltd. Mr. Otedola shared this on his Instagram Profile earlier today, confirming a deal that has been in the work for months.
What Next: With the deal closed, Femi Otedola will now focus on his flagship power asset, Geregu Power Plant which was not part of the deal.
- Forte Oil will now focus only on downstream and upstream under new ownership. Femi Otedola already updated his Instagram handle as Executive Chairman, Geregu Power Plant.
- The billionaire believes Power should be his next focus after operating in the downstream sector for over 20 years.
- With Power, Otedola believes he has the business that attracts high demand with less competition when compared to oil and gas.
- Under Forte Oil, Geregu Power has posted margins as high as 40% boosting the company’s operating income since its acquisition in 2013.
- Now that it has been spun off Forte Oil and owned by majorly by Femi Otedola, the asset will likely be his mainstay leaving him with a major role to play in Nigeria’s energy sector.
The share price of Forte Oil Plc has received a boost in the wake of the sale, opening at N32.30 per share at the Nigerian Stock Exchange yesterday up from its last week opening price of N25.75, signaling a 24.44% rise, an equivalent of N8.53 billion capital gains.
- This came barely one week after the Exchange endorsed the transfer of the 75% majority equity stake in the company from its Chairman, Femi Otedola, to Prudent Energy and Services Limited in a share purchase deal.
- The company’s share price also closed 10% up at the close of business on Wednesday 19th June 2019.
- Forte Oil had a market cap of N45 billion as the conclusion of the sale was announced.
Backstory: Nairametrics had last December reported that Forte Oil had notified the NSE of its principal shareholder’s intended divestment of his holding in the company, which was then expected to be consummated in Q1 2019. During this period, the company went through due diligence and other regulatory approvals subject to the conclusion of the transaction.
Details of the Deal: Prudent Energy will invest the 75% stake through Ignite Investments and Commodities Limited.
- Sefton Fross, a leading full-service indigenous law firm, is the advisor to the buyer while Stanbic IBTC Capital Limited and PriceWaterhouse Coopers are the Joint Financial Advisers.
- The deal would see a total of 982.97 million ordinary shares of 50 kobo each change hands. It is said that each unit of the shares would be divested at N66.01 with a total value of N64.89 billion.
- The transaction price of N66.01% represents about 104.4 per cent premium on Forte Oil’s opening share price at the NSE yesterday.
- Otedola had held the shares through direct and indirect shareholdings, the latter in the names of Zenon Petroleum and Gas Company Limited and Thames Investment Incorporated.
Reasons for the Divestment: Forte Oil has said that Otedola’s decision is premised on his desire to invest the proceeds in harnessing and maximising business opportunities in refining and petrochemicals. Interestingly, Otedola’s friend and business mogul, Aliko Dangote, is currently constructing a multibillion-dollar oil refinery and petrochemical plant in Lekki Free Zone, Lagos.
Earlier Development: In May 2018, Otedola had obtained the shareholders’ nod to divest the group’s upstream services and power generating businesses including downstream businesses in Ghana in a move aimed at concentrating Forte Oil’s operations on its Nigeria’s downstream marketing business.
Forte Oil, however, informed the NSE of the completion of this transaction and other plans to sell some of its other subsidiaries in a statement dated 3rd May, 2019 and signed by Akinleye Olagbende, it general counsel.