Oando Shares Appreciates by 10% On First Full Day Of Trading

To the relief of Oando shareholders, investors and the general public, the technical suspension on the trading of the company’s shares was lifted for a second time by the Nigerian Stock Exchange (NSE).

The shares of the company commenced trading on the capital market on the morning of Thursday April 12, 2018 following a directive by the Securities and Exchange Commission (SEC).

The 176 days technical suspension was hitherto lifted on the morning of April 11, 2018 following an April 9, 2018 directive by the SEC. However, three hours into trading, the NSE reinstated the technical suspension. In a statement released by the NSE, on the evening of April 11, 2018 the Exchange explained that they reinstated the technical suspension based on a new directive from the SEC, throwing the financial market into chaos. The share price commendably rose to N6.30, a 5.8% increase from N5.99 within three hours of trading on Wednesday morning, April 11. The regulator briefly re-imposed the suspension on the same day, citing SEC directives but then lifted it again by Thursday, April 12.

The NSE’s statement went further to say: “In the overall interest of investors in Nigeria’s capital markets, and following consultation with the Commission please be advised that at the start of trading, 12 April, 2018, trading in Oando’s shares will resume without any impediment in price movement consistent with the NSE’s market structure.”

On its first full day of trading, Oando’s shares were already highly sought after. According to the Chief Compliance Officer and Company Secretary, Ms. Ayotola Jagun; “On day one, 178 million Oando shares were on bid with only 5.5 million available for sale. The Company’s share price hit the NSE daily price ceiling of 10% by 10.45am; further evidence that there is a lot of interest in Oando shares and that the general mood around the market and our shares is positive.”

The technical suspension which lasted 176 days reflects negatively on the credibility and competence of the country’s capital market regulators. It has also hit hard Oando’s over 270,000 shareholders, investors, partners, management, staff and everyone who owes their livelihood directly or indirectly to the company. The true beneficiaries of the technical suspension are in fact those large investors with substantial shareholdings who have the deep pockets and were able to take advantage of the state of affairs to buy-out the minority shareholders at a discount to the true value of the shares, whilst also creating a black market for the company’s shares. Shareholders were denied the opportunity of benefitting from Oando’s positive performance and gains spurred by higher crude prices over the last months six months.

Oando’s positive performance over the past six months has been remarkable. In Q3 2017, 9 days after the technical suspension was placed, Oando declared a profit after tax of N7.1 billion in its year-end September 30, 2017 results. The company, prior to this result declared three profits in a row, FYE 2016, N3.5 billon PAT; Q1 2017, N1.7 billion; and H1 2017, N4.6 billion PAT.

The company started 2018 on a positive note, by reaching an amicable agreement with Alhaji Dahiru Mangal after adequately addressing the concerns he raised in his petition to the SEC; this was shortly after the price of Brent Crude hit $71, its highest since December 2014. The company recently commissioned its new office building, the Wings Office Complex, a two 12-story building which also offers a world-class indoor event space, a one-of-a-kind space that can hold up to 300 people and an outdoor waterfront area with a hosting capacity of 200 people and overlooks Lagos State’s waterway. The building will not only act as the company’s new state of the art head office but will also be an additional revenue generator from its 27,000m2 worth of lettable office space.

The company has shown that even in the most challenging times it continues to identify ways to create value, including exploring new business opportunities. Recently, the Nigerian National Petroleum Corporation (NNPC) announced that a consortium consisting of Oando PLC and OilServe Limited have been awarded the Engineering, Procurement, Construction (EPC) mandate for the construction of gas pipelines stretching from Ajaokuta to Abuja as part of the Ajaokuta-Kaduna-Kano Pipeline. The pipeline is a section of the Trans-Nigerian Gas Pipeline under the gas infrastructure blueprint designed to enable the industrialisation of the Eastern and Northern parts of Nigeria and also enable connectivity between the East, West and North, which is currently non-existent.

Speaking on the lifting of the technical suspension, financial expert, Bismark Rewane the MD of Financial Derivatives rightly noted: “The way we handle these matters also sends a clear signal to potential, existing and international investors that this market is transparent, accountable and is there to protect all interests and not to be used for punitive purposes.” Bismark advised that the market regulators should learn from their mistakes on the handling of Oando’s issue and ensure it is not repeated in the future.

In a statement from Oando they indicated that the forensic audit into the affairs of the comapny is currently underway by Deloitte Nigeria (Deloitte), the SEC appointed forensic team lead. According to the Company’s statement; “To date, the Company has been fully cooperative with both the SEC and Deloitte. In the spirit of goodwill, transparency and full disclosure, we will continue to cooperate with the SEC and its nominated parties in the discharge of their duties as the Capital Markets regulator during this exercise.”

Bismark Rewane further advised that the commission should commit the resources needed to conclude the forensic audit on Oando as the market cannot wait indefinitely.