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Oando renews moves to list subsidiary on Nigerian Bourse

By on October 30, 2014

Oando Plc is renewing moves to list its downstream subsidiary, Oando Marketing Limited (OML), as a separate entity on the Nigerian Stock Exchange (NSE). This follows the approval given by the shareholders of the company at the annual general meeting held in Lagos last Monday.

Oando had in 2011  received the approval of the Nigerian Stock Exchange (NSE) to list  OML in the fourth quarter of that same year. However, the plan was shelved due to the inauspicious prevailing environment at that time.

However, the leading energy firm, is making fresh moves to realise the objective of listing OML which will give shareholders the opportunity to compare the company with others in the petroleum marketing sector  of the NSE.

The shareholders, who had earlier in the 2009 given their approval for the listing, on Monday, renewed that approval by authorising the directors to  “reorganise and/or  divest  any and/or  all of   the company’s  shareholding  and investments in   the  downstream business  by way  of sale, transfer and/or any  other form of  disposition which the directors  resolve to be  in the best interest of  the company subject to the  approvals  of relevant  regulatory  authorities.”

Speaking on the listing  strategy, Group Chief Executive Officer of Oando Plc, Mr. Wale Tinubu said    to list its  downstream business so that they will become a separate  entity.

“Oando downstream operations will be   listed on the NSE, in which Oando Plc will still remain a shareholder of  the company and will control the operations  but will invite other shareholders who are  seeking exposure to the downstream. This will allow us   to take some of the cash in the downstream to invest in the midstream and upstream  where returns are better,” he said.

According to him, the company is making these decisions by looking at the portfolio, at the returns and cost of capital and  which business represent  their  future and which business represent  their  past.

He explained that the downstream business is a lot of volume, is lot of cash but the return on investment is so low while the company continues to worl for the banks.
He said  every naira  the company made as a profit in that business,  the banks are paid  N5 as interest, adding that  while the downstream business gives a return of  2.5 per cent return based on turnover, to upstream gives over 20 per cent return.

Tinubu disclosed that the first step in the divestment is to seek potential buyer for up to 49 per cent of the company, while the remaining 61 per cent would be held by Oando Plc.

 

[This Day]