USA Africa Dialogue Series - Transcorp to raise $1bn for Nigerian plants

Transcorp to raise $1bn for Nigerian plants

April 17 2014 at 11:13am
http://www.iol.co.za/business/companies/transcorp-to-raise-1bn-for-nigerian-plants-1.1677486


Lagos - Transnational Corporation of Nigeria, which has interests in
industries ranging from agriculture to oil, plans to raise as much as
$1 billion to build power plants as it seeks to triple profit in 2014.

"We think we can reach financial close by January 2015 and start
construction" of a 1,000 megawatt gas plant, chief executive Obinna
Ufudo, 42, said in an April 11 interview in Lagos.

The company will explore fundraising options including bank loans,
selling shares or bonds, he said.

Nigeria sold control of 14 power companies to new owners last year
including Siemens Korea Electric Power Corporation and Lagos-based
Transcorp to attract private investment to reduce blackouts.

Transcorp bought the Ughelli gas plant in the Niger delta and plans to
boost its output to 700 megawatts by the end of the year after
spending as much as $300 million on turbine repairs, Ufudo said.

An increase in power generation capacity will help treble pretax
profit to 30 billion naira ($185 million) this year, Ufudo said.

"With the kind of expansion we plan in key sectors we operate, our
vision is to make about 160 billion naira in profit by 2018," he said.

Transcorp was set up in 2004 to invest in industries in Africa's
biggest economy.

The company is 44 percent owned by Chairman Tony Elumelu and its
market capitalisation has increased almost tenfold to 149.4 billion
naira since 2008, according to data compiled by Bloomberg.

The shares fell 0.8 percent to 3.86 naira by the close in Lagos yesterday.


International Hotels

Transcorp plans to start the $500 million construction of three
"international standard hotels" this year in the capital Abuja, Lagos
and the oil-rich Rivers State and it will upgrade the existing
670-room Transcorp Hilton Abuja hotel, Ufudo said.

The company has said it plans to build eight hotels under the Hilton
brand by 2018.

"With improved occupancy and performance, our hospitality business is
contributing to profit," Ufudo said.

"With Nigeria a strategic investment destination in Africa, we expect
the hospitality business to continue to improve."

A rebasing of the way Nigeria's economy is measured for the first time
in two decades showed that it's the biggest on the continent, larger
than South Africa's, the National Bureau of Statistics said April 6.

The country is Africa's most populous with about 170 million people
and also the continent's biggest oil producer.


Fruit Production

Transcorp opened a fruit concentrate production plant in the central
Nigeria state of Benue last year with a capacity of 26,500 metric tons
a year, Ufudo said.

The company has secured land to start construction of another factory
with a capacity of about 100,000 to 120,000 metric tons.

"As the nation imports almost all of its fruit concentrate, the market
is there for us to take," he said.

The company is awaiting regulatory approval to begin pumping oil from
its Lease 281 in the Niger River delta, Ufudo said.

Transcorp jointly owns an oil lease with Johannesburg- based SacOil
Holding and London-based Energy Equity Resources.

"We'll start drilling this year if we get the approval," Ufudo said.

Bloomberg News

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