Forte Oil Plc has said it is planning to sell shares worth N20bn to institutional and high net worth investors, and has applied for regulatory approval for the transaction.
The energy firm said on Monday that the capital raising would be done as a public offer for shares through a book-building process to help price discovery, adding that it had applied to the Securities and Exchange Commission and Nigerian Stock Exchange for approval.
It said its core investor, Zenon Petroleum and Gas Limited, owned by billionaire, Femi Otedola, with a total stake of 62.97 per cent in the company, would not participate in the offer, according to Reuters.
Nigerian companies are going through a tough time brought on by low oil prices, which tipped the economy into a recession, depleted the country’s foreign reserves, weakened the currency and caused chronic dollar shortages, thereby frustrating businesses.
Several firms, including Guinness Nigeria Plc, reported losses last year due to the weak economy, and are set to raise funds from existing shareholders.
In 2016, Forte Oil posted a 24 per cent fall in pre-tax profit, which knocked it shares down by 74.4 per cent.
This year, the shares have fallen by 34.2 per cent, giving it a market value of N68.8bn. It ended 4.98 per cent down to N52.81 on Monday, underperforming the main index, which gained 0.96 per cent.
On Monday, Forte Oil said it was on track to achieve its target for 2017 and that based on its performance so far, it could pay out half of its earnings as dividend.
It said its fuel distribution and power business accounted for 95 per cent of its operating profit and that it hoped to announce its half-year audited account before July 31.
“The outlook remains positive on the back of the renewed peace in the Niger Delta…while the passing of the Petroleum Industry Governance Bill by the Senate is another positive,” it added.
Last year, the energy firm planned to raise N100bn in debt or equity for expansion. It later sold N9bn in five-year bonds.
Nigeria’s IPO market has dried up for almost a decade following a stock market crisis with regulators struggling to revive it. In March, SEC proposed to cut listing fees to attract issuers.
Last year, stocks shed 40 per cent in dollar terms after the naira fell by a third due to the Central Bank of Nigeria’s currency curbs. This year, stocks have recovered after the CBN in April allowed investors to trade the naira at market rates.
But IPOs have yet to resume.
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