Oando to issue $500m shares in South Africa
August 26th, 2006 mishacko || mishacko@yahoo.co.uk
By Mishack Okpara
Oil company OANDO is set to raise $500million in South Africa and has started talks with three top South African investors Old Mutual, Investec, and Sanlam to take up the new shares. This will increase the amount of shares in non-Nigerian hands to about 25 percent of its total shares. The money will be used for various projects including the expansion of gas pipelines. The company is also expected to raise another $500-million in 2009 when it hopes to obtain its own refining operation licence and produce a minimum of 200,000 barrels of refined product a day.
Johannesburg-based asset manager, Nothando Ndebele, said OANDO had been largely anonymous in South Africa for a number of reasons. “The low liquidity hasn’t help. Only R9-million (about US$1.3-million) has been traded since it listed last year, averaging less than R1-million a month,” said the asset manager. Ndebele said OANDO is ” also seen as more expensive “because its share price is sitting at a high price-earnings ratio of more than 20, nearly double that of SA petrochemical giant, SASOL’s 11. It is however expected that the new issue would make the stock more available on the floor of the Johannesburg Stock Exchange(JSE).
Meanwhile, the company resently presented an impressive half year(June 30) result on the floor of the Nigerian Stock Exchange. Turnover increased by 63% to $1,182 million compared to the same period in the prior year while profit after tax increased by 14% to $12.26 million. The increased price of crude oil, strong performance from new businesses within the Oando group and improved product availability are the three main factors leading to the significant rise in turnover.
Group CEO, Mr Wale Tinubu, commented on the performance, “We are pleased to announce a strong performance for the first half of this financial year. This has largely been driven by improved efficiencies from all businesses within the Group despite continued industry challenges such as high crude prices, a tight margin environment for the marketing business and emerging government deregulation. We continue to see improved contribution from new businesses, Energy Services, Gaslink and Production and Development, creating a more diversified and sustainable profit base.”
Oando, whose primary businesses include Petroleum Marketing, Supply & Trading, Natural Gas distribution, Energy Services and Exploration and Production is listed on both the Nigerian Stock Exchange and the JSE Limited.
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