Geregu Power Plc is witnessing investors’ positive sentiment following the announcement that Afreximbank has completed the acquisition of a 5% minority stake in the company.
The news resulted in the company’s share price gaining as much as 10% (or N56 billion) at the close of trading on Wednesday, February 23rd, 2023.
More on the gain: Checks by Nairametrics showed that the company’s stock price rose to N246.40 per share at the close of trading, yesterday, up from N224.00 the previous day. This represents a growth of 10% or N56 billion.
Further analysis showed that Geregu Power closed the trading day with N616 billion in market capitalization as against N560 billion the previous day.
FEDA’s purchase of 5% stake: Geregu Power Plc had notified the Nigerian Exchange Limited and the investing public of the purchase of 5% of its shares by the Fund for Export Development in Africa (FEDA). FEDA is the impact development arm of the Africa Export and Import Bank (Afreximbank).
According to the statement signed by Akinleye Olagbende, Company Secretary, Geregu Power Plc, the purchase of the shares was concluded on the 21st of February 2023 with the purchase agreed on the 21st of December 2022.
The statement noted that with the purchase, FEDA currently holds 5% of Geregu Power Plc Shares.
Message to the market: Speaking on the development to Arise Television, the CEO of Geregu Power Mr Akin Akinfemiwa noted that the deal signals three messages to the market. He said:
- “The first one is a testament to our adherence to world-class corporate governance practices, which is driven by our sterling management both on the board and at the management level.
- “The second one is FEDA’s firm belief in our short, medium and long-term goals towards becoming the power company of choice in Nigeria and the West Africa region.
- “The third one which I consider as very significant is FEDA’s firm believe in Nigeria’s electricity supply industry as a key driver of structural transformation for trade on the African continent.”
Akinfemiwa further noted that FEDA is also joining the corporation of China’s power company-Shangai Municipal Electric as an institutional investor who owns equity in Geregu Power.
- “They have been here before FEDA, and if you look at it, it opens the door for other institutional investors who may be a part of our growth as well as our success story,” he said.
On whether due diligence goes both ways on a deal like this, Akinfemiwa who admitted that it goes both ways noted that on the side of the institutional investors such as FEDA, there was extensive due diligence concerning what the company does in terms of corporate governance structures and other things.
- “Due diligence was so extensive because FEDA is so thorough and they are not just going to invest in any company. But for us as a target, we are also very particular about the people we bring into our domain.
- What is most essential for us is to identify such institutional investors who have corporate alignment not only to the key goals and objectives but also to the Nigeria electricity supply industry and the benefit of our shareholders,” he said.
First GenCo to list on NGX: Geregu Power, a leading power generation company (GenCo) in Nigeria, is the first GenCo to be listed on the NGX main board, a listing segment for well-established companies with demonstrable records of accomplishments. The listing of Geregu’s shares added N250 billion to the market capitalization of NGX, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.
