Afrexim’s Feda completes acquisition of 5% ownership of Geregu Power Plc

A total of 125.01 million units of Geregu Power Plc shares valued at N12.5 billion were consummated in an off-market trades on Tuesday February 21, 2022.

According to the off-trade report obtained by Nairametrics, the deal was a negotiated deal with PAC Securities Limited (buyer) and APT Securities and Funds Limited (seller).  

Nairametrics understands the transaction involves an acquisition of 125 million shares of Geregu Power by Afrexim Bank subsidiary, FEDA.

FEDA: The Fund for Export Development in Africa (FEDA), the development impact investment platform of African Export-Import Bank (Afreximbank) recently announced that it has received internal approvals to acquire a minority stake in Geregu Power Plc, subject to satisfactory diligence and documentation. 

• FEDA has the obligation of providing capital towards advancing intra-African trade, export development and industrialisation in Africa. 
• It also mentioned in a statement, said it has made a strategic decision to support leading energy platforms across Africa, including the renewables and transition fuels sectors as part of its intervention efforts in Africa’s energy sector. 
• FEDA noted that it targets to support the business as a minority investor and work with the current owners and management team to drive the expansion of the business over the next years. 

What this means: The FEDA acquisition of Afrexim Bank shares is the first major foreign investment of a publicly quoted company in Nigeria in 2023.

• Geregu and Afrexim announced in December that they had finalized an agreement for strategic purchase of 5% of Geregu shares by Afrexim on the NGX.
• Geregu Power shares has rallied by over 100% since it was listed last October and is currently trading at about N224 per share.

Geregu results: The company reported a earnings per share of N4.47 per share a 50% drop from the prior year as multiple system collapses and gas supply issues hampered power generation.

• However, bulls in support of the share price rally suggest the high earnings multiple is indicative of a possible ramp up of power generations and a likely acquisition of Geregu 2.
• Geregu is currently valued at over N560 billion more than double its valuation when it listed.

Off-Market Trades: Trades which are not settled through the Clearing Corporation/ Clearing House of exchange are classified as ‘’Off Market Trades”. Delivery of securities to or from sub-brokers, and delivery for trade-for-trade transactions, by this definition are off-market trades. 

• Geregu closed its last trading day (Tuesday, February 21, 2023) at N224.00 per share on the Nigerian Stock Exchange (NGX).  
• Geregu Power began the year with a share price of N149.00 and has since gained 50.3% on that price valuation, ranking it seventh on the NGX in terms of year-to-date performance.  
• China’s largest power company Shangai Municipal Electric also owns equity in Geregu Power.

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