Yesterday, the internet was abuzz with the news that Dangote’s best friend, Femi Otedola, splashed over 3 billion naira on a yacht owned by late Greek ship owner Onassis.
Femi wants to celebrate his 60th birthday by cruising around the world for one month, surrounded by his family, on one of the world’s biggest yachts.
What many people did not know was that Otedola made double of what he spent on that yacht last month, so splurging 3 billion naira on his vanity is, in fact, chump change compared to the money he cashed out.
The question is, “How did he make the money?”
Last month, Femi listed his power-generating company, Geregu Power Plc, by way of introduction at the Nigerian stock exchange.
The listing was symbolic and well celebrated among the investment community that I belong to because Geregu Power Plc is the first power generation company to list at the Nigerian stock exchange.
This is why this symbolic move by Otedola matters.
Feni Otedola owns 95% of Geregu’s power plant through its parent company, Amperion Power Distribution Company Limited (“APDCL”).
The Gerugu power plant was listed on the Main Board of the Nigerian Exchange Limited (NGX) by way of listing by introduction with the admission of 2.5 billion ordinary shares of 50 kobo each at N100 per share on the Exchange.
It was also instructive that Femi listed the power-generating company by way of introduction instead of the usual initial public offering (IPO) that most companies listed on the exchange did.
Listing a company by introduction simply means that no new shares are created; only existing, outstanding shares are sold.
This also means Geregu Power Plc’s listing by introduction entails that only existing shareholders of Geregu—in this case, its owners—trade their already existing shares with anyone who may be interested in buying a piece of the company.
Remember, Femi owns 95% of the listed power plant.
What this means is that Femi sold his shares to stock exchange investors and traders who have agreed to buy Femi’s shares.
Follow the money.
On the first day of trading after the shares were listed, the share price went up to 110 naira from 100 naira, and it was said that investors, including Femi, made 25 billion in one day of trading.
8.5 million shares were traded in 70 deals.
Calculate 8.5 million by 110 naira; that will give you an idea of how much Femi made in one day.
And those shares were bought from Femi Otedola, who was the major investor selling them to retail investors.
The second day of trading, the stock price of Geregu PLC shot to the moon as the price of one stock of Geregu’s power plant went from 110 to 120 naira.
The company’s investors gained 50 billion in the second day as 4.96 million shares of Gerugu, valued at N586.75 million, were sold.
The same man is busy selling shares to willing retail investors.
And when these retail investors buy from him, they can resell to other willing buyers who want to own a piece of Gerugu Power Plc or hold in order to sell when the price of Gerugu Power Plc quadruples in the future.
The sustained bearish market in the Nigerian stock exchanges has caught up with Geregu Power Plant’s stock price, but not before Otedols succeeded in cashing out by selling his shares to retail investors.
Femi is still selling shares of Gerugu Power to investors who want to buy, but not at the volume he was doing when the shares of the power company were newly listed.
So splurging 3 billion naira on a one-month yacht cruise is actually chump change, very insignificant when you juxtapose it with the money he cashed out last month from Gerugu shares.
I won’t be surprised to hear that the money for the expensive 60th birthday came from the Gerugu deal that he did last month.
In my study of the Nigerian richest men and women, two things stand out for me.
1) They have the capital to grow their wealth, so they spread their money around, which in turn multiplies their money for them.
2) They spend money on their vanities,
For some, it is the dating and taking care of premium babes at Banana Island and Ikoyi.
While for some, they spend on expensive toys like acquiring private jets or splurging 3 billion on a yacht cruise.
While for the rest, they give their wealth to charity, planting a tree today that will provide shade for the next generation when they are no more.
An example that comes to mind is what my boss, Dr. Samuel Maduka Onyishi, MON, the chairman of Peace mass transit, is doing in Enugu by spending over $120 million on building a university and a secondary school that will immortalize his legacy and his legendary name.
If you go to the university site in Enugu, you will be left speechless, and then you will agree with me that it is not possible for the owner to recoup the money spent on that project in his lifetime because the investment is massive.
Femi Otedola is one of my favorite Nigerian entrepreneurs.
He is a shrewd businessman who has paid his dues and deserves whatever easy life he is enjoying at the moment.
Today is his 60th birthday, and happy birthday to him!
