125 million shares of Geregu Power Plc valued at N12.5 billion were traded in an off-market trade on Tuesday, February 21, 2022. The acquisition of 125 million shares of Geregu Power Plc by Afrexim’s FEDA was facilitated by PAC Securities Limited for the buyer and APT Securities and Funds Limited for the seller.
FEDA which stands for The Fund for Export Development in Africa is the development impact investment platform of the African Export-Import Bank (Afrexim). The platform provides capital to promote intra-African trade, export development, and industrialization across Africa. In December 2022, an announcement was made stating that FEDA had obtained internal approvals for the acquisition of a strategic minority stake in Geregu Power Plc, pending satisfactory due diligence and documentation.
In the announcement, it was noted that to support Africa’s energy sector, FEDA made a strategic decision to support leading energy platforms across Africa. FEDA also stated its intention to back Geregu Power Plc as a minority investor and collaborate with the existing owners and management team to facilitate the growth of the enterprise in the coming years.
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According to Prof. Benedict Oramah, President and Chairman of Afreximbank and Chairman of FEDA platform entities,
“We are very pleased with this proposed investment, which marks a critical step towards supporting Nigeria’s power sector, and more broadly, towards advancing Africa’s industrialization and energy security. Without adequate power, Africa cannot achieve global export competitiveness. Afreximbank and its subsidiaries, including FEDA, are focused on creating a level playing field so that African products can compete at near equal footing with those originating from other markets. We hope that this approved investment will take us closer towards that goal.”
Commenting on the deal, the CEO of FEDA, Marlène Ngoyi noted,
“The proposed investment in Geregu Power demonstrates FEDA’s ability to intervene in opportunities and sectors that are critical towards driving the structural transformation of trade on the continent. Geregu Power is a key player in Nigeria’s power sector. FEDA is pleased to partner with the Company in its next phase of growth.”
The purchase of Geregu Power Plc shares by FEDA marks the first significant overseas investment in a publicly traded firm in Nigeria for the year 2023. Since its listing, last October, the shares of Geregu Power have surged by more than 100%, and are presently trading at approximately N224 per share.
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The company’s earnings per share of N4.47 per share took a 50% hit from the previous year due to power generation challenges caused by several system failures and gas supply problems. Nonetheless, proponents of the share price surge believe that the high earnings multiple signals a potential increase in power generation and a potential acquisition of Geregu 2.
At the start of the year, Geregu Power had a share price of N149.00. Since then, it has surged by 50.3%, positioning it as the seventh-best-performing stock on the NGX in 2023.
