Forte Oil plans to sell N20bn shares
Forte Oil Plc has said it is planning to
sell shares worth N20bn to institutional and high net worth investors,
and has applied for regulatory approval for the transaction.
The energy firm said on Monday that the
capital raising would be done as a public offer for shares through a
book-building process to help price discovery, adding that it had
applied to the Securities and Exchange Commission and Nigerian Stock
Exchange for approval.
It said its core investor, Zenon
Petroleum and Gas Limited, owned by billionaire, Femi Otedola, with a
total stake of 62.97 per cent in the company, would not participate in
the offer, according to Reuters.
Nigerian companies are going through a
tough time brought on by low oil prices, which tipped the economy into a
recession, depleted the country’s foreign reserves, weakened the
currency and caused chronic dollar shortages, thereby frustrating
Several firms, including Guinness
Nigeria Plc, reported losses last year due to the weak economy, and are
set to raise funds from existing shareholders.
In 2016, Forte Oil posted a 24 per cent fall in pre-tax profit, which knocked it shares down by 74.4 per cent.
This year, the shares have fallen by
34.2 per cent, giving it a market value of N68.8bn. It ended 4.98 per
cent down to N52.81 on Monday, underperforming the main index, which
gained 0.96 per cent.
On Monday, Forte Oil said it was on
track to achieve its target for 2017 and that based on its performance
so far, it could pay out half of its earnings as dividend.
It said its fuel distribution and power
business accounted for 95 per cent of its operating profit and that it
hoped to announce its half-year audited account before July 31.
“The outlook remains positive on the
back of the renewed peace in the Niger Delta…while the passing of the
Petroleum Industry Governance Bill by the Senate is another positive,”
Last year, the energy firm planned to raise N100bn in debt or equity for expansion. It later sold N9bn in five-year bonds.
Nigeria’s IPO market has dried up for
almost a decade following a stock market crisis with regulators
struggling to revive it. In March, SEC proposed to cut listing fees to
Last year, stocks shed 40 per cent in
dollar terms after the naira fell by a third due to the Central Bank of
Nigeria’s currency curbs. This year, stocks have recovered after the CBN
in April allowed investors to trade the naira at market rates.
But IPOs have yet to resume.
Source: THE PUNCH.