Article Summary
- Dr. Awele V. Elumelu acquires a 5.076% shareholding in Transcorp Plc, strengthening the control held by her husband, Tony Elumelu.
- Owning a 5% stake in a publicly quoted company in Nigeria has regulatory significance, promoting transparency and preventing insider trading and market manipulation.
- Shareholders with a 5% stake gain influence and control over decision-making processes, and it can provide opportunities for lucrative exits and attractive returns on investment.
Dr. Awele V. Elumelu, wife of billionaire investor Tony Elumelu has acquired 2,063,484,991 units of the total shares of Transnational Corporation Plc (Transcorp) at a share price of N3.12 per share.
The transaction which is valued at about N6.4 billion gives Dr. Elumelu a significant shareholding of 5.076% of the shares of the company. The announcement was published on the website of the NGX and is in compliance with NGX Issuers Rules for disclosing insider-related trades.
The acquisition effectively makes Dr. Awele Elumelu a significant shareholder of Transcorp Plc strengthening the control held by billionaire investor Tony Elumelu.
What 5% ownership means
In Nigeria, owning a 5% stake in a publicly quoted company holds significant importance for various reasons.
- Firstly, the Securities and Exchange Commission (SEC) mandates that shareholders who possess or acquire 5% or more of a company’s shares must disclose their holdings to the public and SEC.
- This requirement promotes transparency in the ownership structure of publicly quoted companies and safeguards against insider trading and market manipulation.
Furthermore, owning a 5% stake grants the shareholder a degree of influence and control over the decision-making processes within the company.
- While it may not confer majority control, a 5% stake can still provide a notable voice in key matters such as board appointments, corporate governance, and major strategic decisions.
- This influence can play a crucial role in shaping the direction and policies of the company.
- Additionally, owning a significant stake, even just 5%, in a publicly quoted company can present lucrative exit opportunities.
- Should the shareholder wish to sell their shares, having a sizable ownership stake increases the chances of attracting potential buyers, including institutional investors or other shareholders.
This allows the shareholder to explore exit strategies and potentially realize a substantial return on investment.
Back-story
The last few weeks have been eventful for Transcorp, especially since the disclosure of a 5.5% or 2,245,639,251 ownership of the shares of Transcorp by billionaire investor Femi Otedola. This made him the second largest investor in Transcorp putting him on track to tussle for control of the company.
However, this also triggered a scramble for the shares of Transcorp as the share price more than doubled to about N2.4 per share in just a couple of days. Tony Elumelu subsequently increased his shareholding of the company to about 25.5%.
Via his special purpose vehicle, HH Capital, he had acquired an additional 9.6 billion units of Transcorp shares, pushing Elumelu’s total stake to 25.58%. This made him the majority shareholder of the company and gave him effective control.
The increase in Tony Elumelu’s stake in Transcorp Plc prompted negotiations for Otedola to exit the company. And after negotiations, both parties agreed that it would be best for the company if they parted ways. Consequently, sold his shares and exited.
Transcorp also scored some good PR during the week after the government issued them a post-privatization discharge certificate following fulfillment of all privatization conditions. Transcorp Power will no longer be subjected to post-privatization monitoring and is the first privatized power generation company to achieve this milestone since the power sector privatization commenced in 2013.
Optics
The recent acquisition by Dr. Awele V. Elumelu and the subsequent exit of Femi Otedola from Transcorp Plc have brought about significant shifts in shareholding and control within the company. Dr. Elumelu’s purchase of a 5.076% stake has strengthened the control held by her husband, Tony Elumelu, solidifying his position as the majority shareholder with effective control.
This change in ownership showcases the strategic maneuvering of influential investors in Nigeria’s corporate landscape.
The optics of these transactions reveal the dynamics of power and influence among the country’s business elite. As billionaire investors engage in strategic moves to consolidate their holdings and control, it underscores the importance of share ownership in shaping the direction of publicly quoted companies. This activity also highlights the potential for significant financial gains that come with timely investments and advantageous exits.
Good write up. But note that SEC guideline stipulated 10percent. It was the stock exchange guideline that reduced it to 5percent to encourage transparency and discourage hostile takeovers. Transcorp was a company spearheaded by the government but consummated by the private sector. I think SEC should make it impossible for the company to be delisted from.the.market..When.you see families masking as investors using their vantage position to acquire the shares of s company, then watch out. There are signs of possible takeover of the company..So the plan would be to keep the price perpetually down so they can pay off minority shareholders at rock bottom.price at a time in the future..We have awakened the regulators to the manipulations going on in Transcorp Plc. Ironically people died and suffered illnesses when the company lost value from a high of N20 per share. We should not wait for when Tony Elumelu and his cronnies have acquired enough shares to be able to delist the company and take it private. We must stop all the co-travellers now. Let them.go.snd establish their own version of Transcorp.