Why Transcorp Hotels IPO is a Good Deal

Sat, 27th Sep 2014


I am delighted to inform you that the initial public offer (“IPO” or “the Offer”) of 800,000,000 ordinary shares of Transcorp Hotels Plc (“Transcorp Hotels”) opened today and the shares are now available to the investing for subscription.

Transcorp Hotels, the owner of the Transcorp Hilton in Abuja; Transcorp Hotels Calabar; and the developer of the Transcorp Hilton, Lagos and PortHarcourt, is positioning itself as the leading hospitality brand in Nigeria and a listing on the Nigerian Stock Exchange underlines our ambition and allows the Nigerian public and investment institutions a privileged opportunity to access this exciting sector.

The IPO is also the first step in fulfilling my commitment to you the Shareholders in Transcorp that the Group will unlock and share the value inherent in its subsidiaries, through a series of listings on the capital markets.

Our fundamental strategy at Transcorp is to create value- nurturing our subsidiaries, as they grow to become world class companies capable of meeting the highest global standards, surpassing our shareholders’ expectations. Our ability to access the capital markets is critical to the achievement of this goal- it also ensures that we can this opportunity with the investing public at large.

The Offer is to raise N8,000,000,000.00 (Eight Billion Naira Only), to be used to fund Transcorp Hotel’s development of two new hotels in Lagos, (Transcorp Hilton Lagos) and in PortHarcourt, Rivers State (Transcorp Hilton PortHarcourt).

Transcorp Hilton Abuja and Transcorp Hotels Calabar currently generate a turnover of over N15.00billion (as at full year 2013 Audited Account). We expect that upon completion of Transcorp Hilton Lagos and Transcorp Hilton PortHarcourt, the revenue should increase to N32.20billion by 2017 and N42.81billion by 2020 thereby putting you- our shareholders and majority owners of Transcorp Hotels (holding 79.5% of Transcorp Hotels post IPO) – in a strong position to earn higher returns from the outcome of this capital raising exercise.

Looking more widely, our value delivery strategy is being implemented across our Group and I would highlight:

  • The payment of Transcorp’s inaugural dividend last year- the first since incorporation- and an event all of us shareholders were pleased with.
  • Our successful diversification into the Power sector, with the acquisition of Ughelli Power Generation Company (“Transcorp Ughelli Genco”). Already, we have been able to increase the power generation at Transcorp Ughelli Genco by over 300%, from 150 Megawatts to 453 Megawatts, in less than one year. Power output is expected to reach 700 Megawatts by December this year.
  • In the resources sector, drilling for oil on the Group’s OPL 281 is expected to commence before the end of this year.

Since the strategic investments by Heirs Holdings in Transcorp in 2011, our focus has always been to ensure that Transcorp is true to its founding intentions- to act as a vehicle by which Nigerians can themselves invest and benefit from our rapidly transforming economy.  With the steps we are taking in the Power, Oil & Gas, Agriculture and Hospitality sectors of the Nigerian economy, we are well on our way to creating a fully diversified Group, capable of delivering superior returns in every economic cycle.

On behalf of the Board, management and Staff of Transcorp Group,     congratulate you on this milestone corporate achievement and enjoin uou all to subscribe to the Transcorp Hotels IPO. This I believe will put you in a position to benefit directly as a shareholder in  Transcorp Hotels and indirectly , through Transcorp Plc, in the unfolding success story of the Group’s Hotel subsidiary- Transcorp Hotels Plc.

Thank you

Tony O. Elumelu