Retail investment rises as Sahcol floats N1.9b shares
•Eleme Petrochemical offer to hit stock market by March, 2019
PLANS to make ordinary Nigerians part-owners of some privatised state-owned enterprises became a reality yesterday, as Skyway Aviation Handling Company Limited (SAHCOL), a member of the Sifax Group, plans to float about N1.9 billion worth shares on the Nigerian Stock Exchange (NSE).
The long-awaited exercise is the first in the capital market after four years of downturn, in a transaction perceived to be a gradual resurgence of Initial Public Offering (IPO) in the nation’s capital market.
SAHCOL, which was privatised in 2009, and acquired by Sifax Group, would be raising the fund by way of Offer for Sale of 406,074, 000 ordinary shares of 50 kobo each at N4.65 per share.
The offer has been scheduled to open November 12, 2018, to close December 19th, 2018, to enable the current shareholders divest part of their stake in the company.
At the official signing ceremony held in Lagos yesterday, the Director-general, Bureau of Public Enterprises (BPE), Dr. Alex Okoh, described the offer as a major milestone, as there has not been any major offering in the market in the past four years.
According to him, the Federal Government is ready to exit businesses and open up channels for retail investors’ ownership, having de-risked some of these enterprises.
Okoh restated government’s commitment to more public share offerings for other pri- vatised state-owned enterprises and subsequent listing on the floor of the Exchange.
Furthermore, he said the public offer for the Eleme Petrochemical, a member of the Indorama Group, is expected to hit the market by the end of March 2019.
According to him, the process of finalising all the documentation required for that public offer would be concluded by February, after which the shares would be offered for public participation in March.
“By way of public offer, we are expecting that in the next few months, Nigeria Reinsurance should also be coming to the market. We are also by way of core investors’ sale, privatising Afam Power Plant, which is a power generation company. We are also looking at privatis- ing at least three national integrated power plants - Geregu in Kogi State, Calabar Power Plant, and Omotoso Power Plant.
“By January, we should have concluded on the sale of Afam Power Plant and the sale of Yola Distribution. These are some of the assets that we are bringing to the market on behalf of the Federal Government.”
In regards to Sahcol, he recalled that the Federal Government prior to its privatisation in 2009, owned 100 per cent stake in the company, noting that the transaction also entailed a full privatisation and 100 per cent sale to the SIFAX Group.
“However, part of the understanding guiding the share sale agreement at that point in time, was that the Sifax Group would offer to the public a certain percentage of the shares through a public offering.”
He continued: “We believe essentially that when it comes to issues around what is usually and sentimentally viewed as national patrimonial asset, it is important that you do not convey the perspective that these assets are being sold to cronies, and friends of government.
“We believe that the most veritable channel to a democratised process of the sale of this asset is through IPO, this gives the generality of Nigerians the opportunity to buy into this previously state-owned asset according to their capacity, and that is why we are doing this at this point in time.”
However, shareholders were apprehensive about 6the tim-
ing of the IPOS in view of the forthcoming general elections.
They insisted that the timing is quite unfavorable, and had urged the promoters to defer the IPO until after the elections to enable investors prepare for the offer to attract increased participation.
For instance, the former Secretary-general, Independence Shareholders Association of Nigeria, Adebayo Adeleke, had argued that the IPO coming at this time is already targeted at strategic investors and not retail shareholders, because the timing would not attract full participation from local investors.
“They (BPE) cannot bring it at a time of the year when we are facing election. Why are they in a hurry to float within a month, it has been there for decades and they want to sell off at this turbulent era, unless you have backdoor arrangement,” he said.
But Okoh insisted that the timing was right, saying: “We know that the capital market is slightly challenged, but our belief is that the acceptance of the offer is a function of the value of the enterprise of the business.
“Unlike many other companies that may be struggling in the economy, SAHCOL is doing extremely well. If you look at the financial statement, and the history of investment that has taken place by the core investor over the past 10 years; we believe that it commands value at this point in time.”
The Chairman of SAHCOL, Dr Taiwo Afolabi, said the company has built strong competence as one of the leading aviation ground handling service providers in Nigeria, growing its market share from 21 per cent in 2009 to over 40 per cent.
According to him, with over 100 per cent growth in revenue and N15 billion in net asset, coupled with massive investment made in infrastructure, SAHCOL is well-positioned for growth.
“SAHCOL’S future strategy is to create long term shareholder value through the profitable operation and expan- sion of its business beyond Nigeria, and into other West African markets with a vision to become the leading provider of passenger, ramp and cargo handling services in the West Africa sub-region.
“In order to achieve this objective, SAHCOL seeks to continually pursue growth and opportunities consistent with its business operations with primary focus on operational excellence and efficiency.”