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Transcorp Hotels raises N4.2bn from Initial Public Offering

By on January 8, 2015

Transcorp Hotels Plc (THP) has said it raised N4.2 billion from its recent initial public offering (IPO), indicating 52 per cent subscription level.  THP had issued 800 million shares at N10 per share to raise N8 billion. The IPO was made to the investing public between September and October 2014. However, the results of the offer showed that it was 52 per cent successful, translating into N4.2 billion as against the N8 billion targeted.

Although the THP was unable to raise the full amount, market analysts told THISDAY that given the bearish trend in the capital market in the last quarter of 2014, the result of the IPO showed a high level of confidence in the company.

“Given the high rate of decline the market suffered in the last quarter of 2014 and the general low investor confidence, THP raising N4 billion is highly commendable. It shows the high level of confidence  investors have in the board, management and future of the company,” Mike Ezeh of Crane Securities Limited said.

THP had said it would use the  proceeds from the IPO to  part-finance its expansion projects specifically the construction of two new flagship hotels in Ikoyi, Lagos and Port Harcourt  as part of its broader expansion plans.

Speaking on IPO, the need for THP to expand its business and  improve on its market share,  the Managing Director of the company, Valentine Ozigbo, had said Nigeria’s hospitality industry is experiencing significant growth, with major demand for expanded capacity and enhanced quality and service.

“THP is ideally positioned, as the existing owner of the largest number of hotel rooms in Nigeria, and partnered with one of the world’s most prestigious hotel brands, Hilton Worldwide, to leverage this demand. The proceeds of this offer will be used to fund the development of two new Transcorp Hilton hotels, one in Ikoyi, Lagos, and the second in Port Harcourt, with both due for completion in 2017. We are delighted to be able to offer the Nigerian public the opportunity to participate in our future success. This offer reiterates our commitment to creating sustainable value for all stakeholders.” Ozigbo said.

He added that the Nigerian hospitality industry is fast becoming more competitive with the presence of international brands in recent years but assured investors that THP has a strong brand and success story.

“We have a strong brand and success story in Nigeria as well as good long term relationships with established suppliers in Nigeria. These, coupled with our partnership with the Hilton Worldwide for management of our facilities, opens up a large opportunity for our proposed developments in the high density areas of Nigeria to attract a considerable portion of business travel and tourist traffic which should translate to adequate guest patronage,” he said.

 

 

[ThisDay]