Infinite Universe is an emerging scientific term that has been used to describe the limitlessness of space and what has also been found to be its continuous expansion. As the size, shape, form, and limits (or lack thereof) have continued to confound scientists even with the increased sophistication of telescopic technology, so has the investments universe been awed by the unlimited capacity of maverick Nigerian serial entrepreneur, Tony Elumelu to cook auriferous business broths with the ease of turning a light switch.
Elumelu’s Transcorp Power, which he took to the market on Monday, March 4, 2024, has become the talk of the Nigerian investments community. Investors and interested bystanders have stood in amazement as the share price of Transcorp Power nosed up on its first day of introduction like a jet plane straight off the runway and maintaining a steady climb after each day’s trade.
I was on the trading floor the day the formal introduction was performed at the NGX. The excitement was palpable and as Peter Ikenga, Managing Director/CEO, and Emmanuel Nnorom, Chairman, both of Transcorp Power, joined Elumelu for the ceremonial opening bell, it was obvious that a different kind of baby had just been born.
I wasn’t moved by the adornments in the speeches made on the day; I was rather convinced that whatever value Transcorp Power holds would be revealed by the interplay of perfect market forces of demand and supply, and I did not have long to wait. By the time trading closed on Friday, March 9, 2024, four days after the listing, Transcorp Power had become the lead driver of the market. From an introductory price of N240, the share price leaped by more than 47 percent to N351.30 per share. This had an immediate impact on the company’s market capitalization which ended the week at more than N2.5 trillion, up N700 million from the N1.8 trillion at introduction.
Naysayers might argue that it is still early days in the journey of the company in the capital market but the speed with which Transcorp Power has been zooming through the trading tables doesn’t suggest there’s going to be any lull soon. In fact, Financial analysts have already begun forecasting a N1,000-plus destination of Transcorp Power’s share price over the next year and those who hold this view have very good reasons.
Those who are making the forecasts are pointing to what they believe is the potential of the power sector to continue to grow over a long period in the future. Research information published by Modor Intelligence stated that the Nigerian power sector will have a cumulative average growth rate of 4.28 percent between 2024 and 2029. Modor noted that over the medium term, increasing energy demand due to increasing industrialization and urbanization activities and penetration of renewable energy is expected to drive the market during the forecasted period. Although it noted that transmission infrastructure presents a growth impediment, the sector got the ticks for continuous growth.
What this means is that interest in the power sector will continue to rise and investors who want to place their bets in high-growth areas will wager on such portfolios in the market. As it is beginning to show, the market, unlike many feared, has a great appetite for the power sector, a fledgling portfolio in the market. It also means that many other players might follow the steps taken by Tony Elumelu and his team by taking (making) recourse to the Nigerian bourse for low-cost financing.
And Tony Elumelu has always been a marvel. In 2001 or 2002, I remember writing a cover story titled, Number One or Nothing for the now-rested Policy magazine. As a young journalist, I had observed the unconventional approach that Elumelu deployed as the CEO of the then Standard Trust Bank, and a few years down the road, he made it to the top of the Nigerian banking food chain. Not done, he extended his gaze across other sectors from hospitality, through real estate, oil & gas, and now power, and each venture turns (turned) into money-spinners that it is today.
When he began to talk about Africapitalism, an economic philosophy that he developed, and which speaks to the belief that Africa’s private sector should play lead roles in Africa’s development, many people who heard him at the beginning felt he was merely creating another buzzword. But Tony does not believe in buzzwords that are not actionable. He has taken this message to every part of the world, and in venturing into the Nigerian power sector with all its challenges, he demonstrated his Africapitalism philosophy firsthand by becoming the first , having surpassed the targets set by the National Council for Privatization.
Tony Elumelu through many of his businesses has been able to prove that Africans are capable of successfully managing multiple multibillion-naira enterprises, and the team he assembled to manage Transcorp Power has demonstrated this in words, stats, and actions. What today is Transcorp Power, in 2012, was Ughelli Power Plant, an underperforming and inadequately maintained government-owned thermal power generating plant that was acquired by Transcorp Plc at a princely sum of $300 million.
Determined to lift the plant from its low output level, the new owners implemented a holistic transformation of the company that lifted the generation capacity from 160MW to 701 MW out of the installed capacity of 972 megawatts, within 4 years, surpassing the NCP’s target of 670MW in 5 years.
Elumelu is ruthlessly efficient and makes sure that businesses that have his imprimatur are run with zero tolerance for waste and redundancy. For him, every factor of production, land, labour, and capital must count in the interest of the factors themselves and for the shareholders as well.
This is why investors are frenzied over Transcorp Power’s stocks. His track record as a turnaround artist, his investment foresight that is capable of spotting profit opportunities even when many see the fundamentals as still hazy, and his ability to spot intelligent resource managers have convinced those who know him to hitch onto his wagon anytime he rides into the capital market.
With Transcorp Power, he arrived at the market loaded with impressive credentials that have got investors swarming. He came with a Transcorp Power whose revenue has been on a steady increase for the past five years, rising from N55.9 billion in 2019 to N142.1 billion in 2023. This represents an impressive 158 per cent increase over the period. Similarly, profits (before tax) rose by 469 per cent over the same period, soaring from N9.26 billion in 2019 to N52.86 billion in 2023.
These are numbers that define corporations that are on the profits plane. Elumelu and his Transcorp Power are promising a future when they would be the source of electricity for one out of every four Nigerians. A quarter of a country as large as Nigeria is a sizeable slice. Assuming each person in this ratio (which, going by the current population estimate of the country is 55 million) pays the sum of N50,000 per annum for electricity, that will aggregate to N2.75 trillion in revenue.
This is a garden replete with flowers effusing alluring nectar. Investors will predictably continue to flock around the stocks. It has long-term prospects, and more importantly, it was made by Tony Elumelu.
