Nigeria: Geregu Power Becomes First Energy Company to List On NGX

13 October 2022
The Exchange Africa
By Albert Nangara

Nigeria currently generates roughly 4,500MW peak despite having an installed power generation capacity of over 12,000MW.

Part of the challenge has been attributed to the state of the national grid which experiences periodic grid collapses, affecting the ability of power plants to generate more power.

The Central Bank of Nigeria has also sunk in over N300 billion to aid working capital and capital expenditure spending in the sector. However, a successful listing of a power company on the Exchange could pave the way for more companies in the sector to source additional capital to fund their balance sheets.

  • Geregu Power Plc, GPP, lists on main board of the Nigerian Exchange Limited, NGX,
  • with the admittance of 2.5 billion ordinary shares of 50 kobos each at N100 per share on the Exchange.
  • However, amid high investors' demand, Geregu Power's stock gained 10 per cent (N10) on its first trading day on the NGX to close at N110 per share from N100 per share it was listed by introduction.

One of Nigeria's leading Electricity Power Plant, Geregu Power Plc was admitted into the Main Board of the Nigerian Exchange (NGX) by way of introduction. This is also the second listing on the Nigerian Exchange this year and is seen as a major achievement for the Exchange.

Geregu Power is also the first electricity company- generation, transmission, or distribution -that will be listed on the Exchange in Nigeria's history. It is also the first successor company from Electricity companies privatized in late 2013 to be listed on the Exchange.

Geregu Power PLC was incorporated in November 2006 as one of the unbundled companies from the now-defunct Power Holding Company of Nigeria (PHCN). The Company began operations in February 2007 to generate electric power supply to the National Grid managed by the Transmission Company of Nigeria (TCN).

Amperion Power owns 99.9 per cent of the company. Calvados holding (owned by Femi Otedola) owns 95 per cent of Amperion Power while Shangai Power owns five per cent.

Geregu Power listed 2.5 billion ordinary shares of 50 kobos each at a share price of N100 per share, valuing the company at about N250 billion on the first day. However, amid high investors demand, Geregu Power's stock gained 10 per cent (N10) on its first trading day on the NGX to close at N110 per share from N100 per share.

The gain pushed its market capitalisation to N275 billion from the N250 billion it was listed. The company traded 8.5 million volume of shares at N935 million in one day as its listing further boosted liquidity in the Nigerian capital market.

The listing of Geregu's shares has added N250,000,000,000 billion to the market capitalisation of NGX, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.

"The listing of the company was the actualisation of a vision to bring world-class standards in governance, sustainability, and business processes to the company and the Nigerian electricity sector.

"Listing on the Main Board of the Exchange will ensure that the long-term growth of the company is assured and its benefits will be passed on to our esteemed shareholders," said the Executive Chairman, Board of Directors, GPP, Femi Otedola speaking on the listing.

Commenting on the development, the Chairman, NGX, Abubakar Mahmood, said: "We are particularly pleased that Geregu Power has joined the prestigious group of companies listed on our Main Board, which will differentiate it as a professionally run power company with high standards, having met NGX's listing criteria.

"A Main Board listing is a sign of commitment to strong corporate governance, excellence, professionalism, service delivery efficiency, and increased returns to shareholders. It is our expectation that the Geregu Power listing will encourage other power generation and distribution companies to list their shares on the Exchange, thereby opening the sector up to cheaper, long-term capital that will boost infrastructural development and value creation."

The Chief Executive Officer of NGX, Temi Popoola, said: "Today's listing is a promising development in the country's power sector. We are delighted to welcome Geregu Power Plc to the Exchange. Having Geregu listed in our market is proof of NGX's commitment to building a robust and inclusive market and creating avenues for sustainable investment.

"This listing will enhance liquidity for Geregu, increase its visibility among global investors, elevate its value and boost transparency, as our marketplace is a sterling platform for raising capital and enabling sustainable growth for national development. As a listing platform of choice, we are committed to working with companies at various stages of growth to explore the different opportunities in the capital market to meet their business objectives."

According to Nairametrics, last July, Geregu Power announced it had successfully raised N40 billion in unsecured corporate bonds at an interest rate of 14.5 per cent. The bond issue is part of the company's N100 billion multi-instrument issuance program meant to finance capital expansion and working capital requirements. This is also the largest corporate bond raised by a Power Company in Nigeria and was reportedly oversubscribed. This also made it the first Electricity company to raise a corporate bond of that magnitude. The capital raise was also the largest in the power sector.

The company's income statement included in its bond prospectus reveal that the company reported a revenue of N70.9 billion for the period ended December 2021 representing a 32.3 per cent increase year on year.The company also reported a profit after tax of N20.5 billion in the same period up 45.2 per cent from N14.1 billion a year earlier. Profits increased at a compounded annual growth rate of 11 per cent since it reported a profit of N13.4 billion in 2017.

At N20.5 billion last year's profits are also double the pre-covid year (2019) profits of N10.39 billion. The company declared dividends of N37.5 billion and N12.3 billion in 2020 and 2021 results, respectively.

The company had appointed the accounting firm of PriceWaterhouseCoopers (PwC) in June 2022 as auditors of the firm; and also brought on board Paul Miyonde Gbededo, former Group Managing Director/CE of FMN.

Read the original article on The Exchange.

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