Femi Otedola, a Nigerian billionaire investor, recently made headlines when he acquired a 6% stake in Transcorp, only to sell it shortly after to Heirs Holdings Ltd. The story, however, is more complicated than it appears. In a statement, Otedola revealed that his relationship with Tony Elumelu, the founder of Heirs Holdings, goes back 16 years when Elumelu was the Managing Director of Standard Trust Bank, and Otedola was the Chairman of Transcorp.
In 2005, Elumelu approached Otedola for funding to acquire United Bank for Africa (UBA), and Otedola gave him $20 million, which was N2 billion at that time. However, when the share price of UBA increased, Otedola decided to sell and get out of the bank. Elumelu appealed to Otedola to hold on to the shares, convinced that there were future prospects. Otedola kept the shares, and later became the Chairman of Transcorp Hotel in 2007 with a 5% shareholding. Unbeknownst to him, Elumelu gradually started buying shares quietly.
In 2008, Otedola went bankrupt in Nigeria, and Elumelu took his shares in UBA to service the interest on his loans and also took over his shares in Africa Finance Corporation, where he was the largest shareholder. In 2012, Elumelu outbid Otedola to buy Ughelli Power Plant for $300 million. These incidents strained the relationship between the two businessmen.
Years later, in March 2021, Otedola acquired a 5.52% stake in Transcorp, making him the second-largest shareholder of the company. As he increased his stake to just over 6%, Elumelu via Heirs Holdings also upped his stake, taking his ownership of the conglomerate to about 25.5%. This triggered a scramble for the shares of the company, and the share price more than doubled within a matter of weeks.
In April 2021, Otedola sold his 6% stake to Heirs Holdings, prompting speculation about the reasons behind the sale. In his statement, Otedola clarified that he agreed to sell his shares to an American firm that turned out to be Heirs Holdings. The revelation prompted him to resign as Chairman of the hotel.
Otedola also revealed that he had offered to buy Transcorp for N250 billion but was rejected. He wanted to maximize the company’s potential as a Nigerian conglomerate with a market cap of at least N2 trillion instead of the current N40 billion. However, some shareholders had a different vision. Otedola respected the majority shareholder’s decision to buy him out, saying, “This is the nature of the game.”
Otedola’s statement highlights the complex relationships and power dynamics at play in the world of high finance. It also raises questions about the role of billionaires in the Nigerian economy and their responsibility to shareholders. Otedola believes in healthy competition and market dynamics, but stakeholders are often shortchanged in the process. He hopes that Transcorp will continue to thrive under new leadership, and he remains committed to the growth and success of Nigerian businesses.
The story of Femi Otedola’s acquisition and subsequent sale of shares in Transcorp is a reminder that the world of high finance is often murky and complex. It also raises important questions about the responsibility of billionaires to shareholders and the broader society. Otedola’s statement provides valuable insights into the power dynamics and relationships at play in the Nigerian business world. Ultimately, his message to Transcorp and its shareholders is a call for healthy competition and market dynamics that create value for everyone involved.