Femi Otedola has once again raised eyebrows with his latest foray into the power sector, and his recent donation of a multibillionaire faculty of Engineering complex to Augustine University, Ilara-Epe. While his newest ventures hold immense potential for Nigeria’s economy, they also pose strategic questions about their potential impact on the environment and society and whether the Nigeria’s power sector is the next big thing for investors since the oil boom.
It is obvious that Mr Otedola’s latest ventures seem to strategically tally with recent regulatory policies and political trends in Nigeria, especially with the recent signature of 16 constitution alteration bills into law by President Muhammadu Buhari and the success of Bola Ahmed Tinubu in the recently concluded presidential elections. Among the alterations to the constitutions, No. 17 alteration moved electricity and power generation from the National grid from the exclusive to the concurrent list by granting power generating and electricity financing powers to the state government. For starters, this news means that the Nigerian power sector will attract private investors, thereby maximising efficiency and profitability for companies in the sector. The story, especially gets interesting as the President Buhari’s executive assents follow few months after the successful listing by introduction of Geregu Power Plc. – a recently privatised power generation company where Otedola has 95.6% equity stake – by the Nigeria Exchange Limited in the last quarter of 2022.
Perhaps, these moves are a clarion call for an insightful study into his unique strategies and robust business foresight that have been replicated in his recent business interests. There are obviously lessons for the upcoming generation of entrepreneurs in Nigeria. Recall that Femi Otedola acquired a 55.3% stake in Forte Oil and grew it into one of the most valuable listed companies in Nigeria’s oil marketing and upstream sector before strategically selling his stake to acquire Geregu Power. His antecedents are undeniably impressive. What does his efforts in Nigeria’s power sector hold for the business tycoon and his ever growing empire? Importantly, what does this mean for Nigeria’s power industry, especially with the recent events in her political space, and the global emphasis on sustainability, net zero carbon emission and ESG policies?
Born on November 4, 1962, in Ibadan, Oyo State, Nigeria, Femi Otedola is a Nigerian magnate and philanthropist, widely known for his significant contributions to Nigeria’s energy and petroleum sectors. He is the son of the late Sir Michael Otedola, who was a former Governor of Lagos State from 1992 – 1993, and Lady Doja Otedola. He received his primary education at Olivet Baptist High School, Ibadan, and proceeded to the Obafemi Awolowo University in Ile-Ife, Osun State, Nigeria. Femi Otedola’s entrepreneurial acumen didn’t begin today. It has reverberated since his childhood with the launch of his first business at age 6, which he called ‘FEMCO’ – an innovative business model that offered manicure services to Femi’s parents’ guests in exchange for a fee coupled with drawn-up receipts for every transaction. The young Otedola would go on to learn the intricacies of business and marketing from his established father and then assume marketing leadership of the family’s printing press business. His entrepreneurial acumen would further take him up the bumpy yet richly rewarding road of business in Nigeria’s terrific economic climate.
Leveraging his solid upbringing, Femi Otedola officially began his entrepreneurial journey in 2003, when he saw an opportunity in the fuel retail market and established Zenon Petroleum and Gas Ltd. He invested a whopping N15 billion in downstream infrastructure development and procured storage depots at Ibafon and Apapa, as well as four cargo vessels with a total storage capacity of 147,000 metric tonnes. In the same year, he also purchased a fleet of 100 DAF fuel-tanker trucks for N1.4 billion. Within two years of its establishment, Zenon became a major player in the Nigerian diesel market, supplying diesel to leading companies such as Dangote Group, Cadbury, Coca-Cola, Nigerian Breweries, MTN, Unilever, Nestle, and Guinness. Furthermore, in March 2007, Zenon obtained a syndicated loan of US$1.5 billion from ten banks to construct the most prominent premium motor spirit storage facility in Africa. The same year, Zenon acquired a 26% stake in African Petroleum, one of Nigeria’s major fuel marketers. In a bid to diversify his business interests, Femi Otedola personally acquired a 29.3% stake in the company, which led to his ownership of a 55.3% controlling stake of African Petroleum and his appointment as chairman of the company.
However, his story isn’t the typical fairytale, as he suffered a huge loss following the crude oil price slump from $146 to $34 in 2008, which saw his net-worth erode substantially from $1.8bn to $550 million due to shock in stock price of African Petroleum (rebranded as Forte oil Plc.). Nevertheless, the Epe-born magnate shouldered it all with aplomb, taking the lessons as they come and returning to make a stunning comeback after the challenging but dutiful repayments of his debts. In 2011, with a complete sell-off of Zenon’s assets to the Asset Management Corporation of Nigeria (AMCON) and his position as majority shareholder and chairman of African Petroleum, Otedola engineered a complete overhaul of the company’s operation, rebranding it to Forte Oil Plc. He dismissed staff of African Petroleum and employed fresh and young professionals with astute business acumen to oversee the installation of robust corporate governance and best practices.
Forte Oil Plc experienced a meteoric rise like Otedola’s rebound and global recovery, having over 500 fuel stations in Nigeria and Ghana. By 2013, the company’s performance beat the earning expectations with its profits after tax exceeding earnings expectations of N2.6billion by N137million. Additionally, the company’s nine-months statements showed a 29% rise in annual revenue to N92.1million from N71.4million in 2012.
Research has shown that a common trait in billionaires and the ultra-wealthy is that when they dislike the operations management of an industry of interest or curiosity, they swing in to shake the industry innovatively, exit it in sound shape, and silently move to a new passion (or curiosity as the modern world prefers). This is the case with business tycoon, Femi Otedola. In 2013, he began his efforts to reinvigorate Nigeria’s power sector like he did in the mid and upstream oil and gas sector, by joining the board of Gegeru Power plc as chairman of board of directors. According to Forbes, Forte Oil, in 2013, through its wholly-owned subsidiary, Amperion Power Distribution Company Ltd., acquired a controlling stake in Gegeru Power Plc, for $132 million under a government-led privatization programme in the power industry under the leadership of former Nigerian president Goodluck Jonathan. With plans to expand the plant capacity to 435 mega-watts gas-fired plant, it also signed an $83 million deal with Siemens in 2015, leading to a 5% spike in the share price of Forte Oil Plc. However, the energy magnate was beginning to realise the need to speed up the pursuance of his new-found passion, the power business. In December 2018, precisely, he announced a divestment program of his direct and indirect stakes in Forte Oil Plc. (now Ardova Plc) to maximize investment opportunities in Nigeria’s refining and power sectors. By 2019, he completed the sale for N64.3bn by reaching an agreement with the Prudent Energy team, investing through Ignite Investments and Commodities Limited, to divest of his full 75 per cent direct and indirect shareholding in the company’s downstream business.
With the completion of the sale of his 75% stake in Forte Oil to Prudent Energy, energy magnate, Femi Otedola shifted his focus to the Nigerian power sector. In a message posted on his verified Instagram handle, he highlighted the significant transformation of Forte Oil Plc. from a struggling petroleum marketing business to a leading integrated solutions provider with a solid presence in downstream petroleum marketing, upstream services, and power generation. He divested from marketing and upstream businesses to focus on consolidating the gains of Geregu Power Plc, where he holds an 80% stake. The power plant, which generates 10% of Nigeria’s power, is owned and operated by Amperion Power Distribution Company Limited, with the remaining 20% stake held jointly by the Bureau of Public Enterprise and Ministry of Finance.
True to Otedola’s Midas touch in business, Geregu Power Plc recently made history by becoming the first generating company to be listed by introduction on the main board of the Nigerian Exchange Limited (NGX), with the admittance of 2.5 billion ordinary shares of 50k each at N100 per share on the exchange. The listing added N250 billion to the market capitalisation of the NGX, providing opportunities for wealth creation and boosting liquidity in the Nigerian capital market. Geregu Power’s stock gained 10% (N10) on its first trading day on the NGX to close at N110 per share, with its market capitalisation increasing from N250 billion to N275 billion. The listing of Geregu’s shares is a significant milestone in the Nigerian electricity sector, reflecting the company’s adherence to world-class standards in governance, sustainability, and business processes, according to Femi Otedola, the Executive Chairman of the GPP’s board of directors.
Listing by introduction is a significant milestone for Gegeru Power Plc, a leading power generation company in Nigeria. Essentially, it means that Gegeru’s shares were officially admitted to the Nigerian Exchange Limited (NGX) without an initial public offering (IPO). To put it simply, imagine you have a really valuable item that you want to sell, like a rare piece of jewellery. Instead of putting it up for auction and letting anyone bid on it, you decide to sell it directly to a trusted buyer who knows the true value. That’s similar to what Gegeru did with its shares – it was introduced to the stock market without going through the process of issuing new shares and offering them to the public.
Being listed by introduction is a major achievement for Gegeru Power Plc because it shows that the company is now recognized as a fully-fledged member of the stock market. It also means that Gegeru’s shares are now available for trading on the NGX’s main board, a listing segment for well-established companies with demonstrable records of accomplishments. In short, being listed by introduction is a big deal for Gegeru Power Plc because it opens up a new avenue for growth and investment, signalling a bright future for the company and the Nigerian power sector as a whole.
In a concerted effort to give back to the society, the Epe-born business mogul has recently proved to the public that he is a true son of the soil, a call for youth to follow in his stead. Femi Otedola donated the finished Block A of a multi-millionaire Faculty of Engineering complex to Augustine University at Ilara-Epe, Lagos State. The building is equipped with state-of-the-art facilities, including lecture halls, laboratories, and a library. The donation by Femi Otedola, the Chancellor of Augustine University is a dream-come-true for the institution and its students, especially as it is close to his mother’s heart, Lady Doja Otedola. The new building provides students with modern and innovative learning spaces that will enable them to learn and conduct research in a conducive environment. The facilities in the building will help the university produce graduates that are well-equipped to tackle the challenges of the modern world and contribute to Nigeria’s technical development. His donation to Augustine University shows his dedication to investing in the future of Nigeria’s youth and human capital development.
As the old saying goes, ‘charity begins at home’, Otedola has not shied away from giving his children the best. Recently, his pink-haired billionaire daughter and Disc Jockey, Florence Otedola, ran a Master’s programme in African History and passed her thesis at the prestigious Oxford University. Recall that this is the third degree the under-30 Nigerian DJ will be completing. She was all joy as she took to her social media handles to share her success story and achievements in ecstasy. Her convocation ceremony was graced by the warm and cheerful presence of her billionaire father, mom, and fiancée, British boxer, Ryan Taylor. Femi Otedola’s support for his children’s education shows his belief in the power of education to transform lives and communities.
Otedola’s contributions to society have been significant, ranging from his philanthropic efforts to his investment in Nigeria’s power sector. Despite facing challenges such as regulatory hurdles and competition in the industry, Otedola has persevered and continues to make an impact. However, criticisms have been leveled against him, including concerns about his business practices and the impact of his ventures on the environment and society. In response, Otedola has emphasized the importance of sustainability and responsible business practices. He has also taken steps to address these issues, such as investing in best practices, sound corporate governance, and promoting environmental awareness.
Otedola’s many accomplishments include serving on various boards, being appointed to government committees, and receiving prestigious awards, such as the National Honour of Commander of the Order of the Niger (CON) in May 2010, for his contributions to the growth of the Nigerian economy. Over the years, he has learned an important lesson throughout his career: no one is invincible. He understands that even those at the top can fall if they are not vigilant and stay on top of their game. Otedola has also realized that being a good entrepreneur does not necessarily make one a good business manager. As a result, he has learned to delegate management tasks to experts and focus on his strengths. His experiences offer valuable lessons about the importance of philanthropy, sustainability, and responsible business practices.