Femi Otedola quietly emerges majority shareholder of FirstBank

Femi Otedola has acquired major shares of FBN Holding Company after a massive mop-up of the shares of FBN Holding, one of Nigeria’s tier one banks.

Otedola is the founder of Zenon Petroleum and Gas Ltd, and the owner of a number of other businesses across shipping, real estate and finance. He has recently invested in power generation as part of the liberalisation of the sector in Nigeria.

According to multiple sources with knowledge of the purchase, majority ownership of FBN Holding Company, owners of Nigeria’s oldest bank, First Bank, is about to be upturned following months of slow and meticulous purchase of the company shares on the floor of the Nigerian Stock Exchange by Otedola. We understand Femi Otedola is now the majority shareholder of the bank with an announcement imminent in the coming days.

The billionaire investor and turnaround specialist famous for taking over African Petroleum earlier in the century and turning it into a dominant player in the downstream space of the oil and gas sector has been mopping up shares of the bank for months gradually accumulating his ownership and surpassing shares owned by any other single shareholder of the bank.

Otedola has been acquiring the shares of the bank through a vehicle, Calvados Global Services Ltd. It is also likely that there could be other vehicles associated with Mr Otedola who may have also been mopping up shares. FBNH currently has 34.7 billion of its shares floating freely meaning it is held by diverse shareholders. This makes the shares easy to acquire on the stock exchange.

The latest audited account of FBN Holdings does not have any shareholder with up to 5% of the ownership of the banking behemoth. Nairametrics understands Mr Otedola, through his proxies and investing vehicles, now owns over 5% of the bank, setting himself up to be the single largest shareholder of the bank. According to our sources, shares of FBNH have been mopped up over the course of the last 6 months when the share price traded at just above N7. However, rumours of an imminent takeover started to make the rounds among traders pushing up the share price of the bank to breach the N8 ceiling by end of September.

Sources revealed off-market block purchases ranging in the hundreds of millions of units were reported by traders with knowledge of the transaction even though it was not immediately clear who was behind the purchases. As the rumours swirled in October, FBNH share price rose as high as N12 per share gaining 69% in two weeks.

Traders also said most of the demand for the stock turned bullish when it became clear Otedola might be behind some of the major purchases. One particular trader suggests, investors see his potential takeover of the bank as a positive sign citing the same momentum that followed the share price of Forte Oil making it one of the best-performing stocks in 2013 after it achieved over 1000% share price growth that year.

FBNH Shareholders

Industry assumptions have often suggested billionaire Oba Otudeko is the single majority owner of the bank considering the enormous control he wielded over the bank for years. However, his latest debacle with the Central Bank following the failed removal of current MD/CEO Adesola Adeduntan marked a sudden end to his control of the bank providing an opening for Mr Otedola to move in on controlling the bank.

According to our intelligence, the billionaire through various entities may have acquired over 5% of the bank at an average price of N9 per share. Sources also reveal to Nairametrics that Mr Otedola already owns over 10% of the bank. Nairametrics cannot immediately confirm the reliability of that information.

FBNH currently has a total outstanding shareholding of 39.5 billion units and a market capitalization of N423.5 billion (over a billion dollars assuming official exchange rate). According to information contained in the 2020 FY report of the bank, 40 shareholders owned 31.03% of the bank while no individual shareholder held more than 5% of the bank. Shareholders with over 5% ownership of shares of a publicly quoted company are statutorily expected to declare ownership publicly.

The financial statement of the company also states Dr. Oba Otudeko owns 532 million units or 1.3% holding of the company. Oye Hassan Odukale reportedly owns 370 million units of the bank according to the information contained in its 2020 annual reports. The billionaire owner of Globacom, Mike Adenuga is also a major shareholder of the company but is thought to own far fewer shares than Oba Otudeko and the Odukales. It is also likely that they have other shares owned by proxies but not included in the shareholdings disclosed publicly.

What the future holds

It is unclear what plans Mr. Otedola has for FBNH, but for him to have acquired this much, Nairametrics believes he has the full backing of the Central Bank. The billionaire investor has a pedigree going for him especially after successfully turning around Forte Oil and then selling it to new owners. He also acquired Geregu Power Plant during the privatization of 2013 and it is touted as one of the most efficient plants in the country.

Relying on his antecedents from previously acquired entities, majority ownership of FBNH by an Otedola backed entity will probably usher in a transformation in the bank revving up investor sentiments in anticipation.

FBNH reported a profit after tax of N38 billion in the first half of 2021 up from N35 billion same period in 2020. According to Financial Times, institutional investors like Black Rock Fund Advisors, Old Mutual Investments Group all own less than 1% individually of the bank.

Previous Turnaround at Geregu Power Plant.

In 2013 an entity controlled by Mr. Otedola Emerged as preferred bidder of the then 414-MW Geregu Power Plant under a joint venture partnership with the State Grid Corporation of China/Shanghai Municipal Electric Corporation; the largest utility company in the world by size and market capitalisation.

The plant has since been revamped, transformed, increasing the overall efficiency of the plant through a major overhaul exercise at a cost of USD 100 million dollars. Nameplate capacity increased from 414 to 435 MW and operational capacity increased to 90 percent of the nameplate capacity about 10% of the national grid.