Shareholders reap return on investment as Oando shares rise by 38%

Oando’s decision to fully co-operate with the Securities & Exchange Commission (SEC) to ensure a smooth and speedy conclusion of the investigation into the company as well as its efforts to reconcile with the aggrieved petitioners is gradually paying off. You would recall that following the implementation of the technical suspension on Oando’s shares and the SEC’s directive for a forensic audit by the Gwarzo led SEC team, Oando took legal action against the Commission, seeking an injunction on the capital market regulator. However, in December last year, in the spirit of transparency and full disclosure, Oando agreed to cooperate with the SEC and early this year dropped all legal action against the SEC.

The company also in January  2018, reached a peace accord with one of the aggrieved petitioners and a substantial shareholder, all part of the company’s actions to close out on the saga that began in 2017 so it can refocus its energy on managing the business optimally.

Minority shareholders of the company, the hardest hit in the Oando / SEC drama, have expressed relief following the recent lifting of the technical suspension placed on the company’s shares. During the period when the company’s shares were placed on technical suspension, the NSE’s All-Share Index gained c.14%, crude oil prices took on an upward trajectory hitting a high of $71 and the company posted positive corporate actions.  By virtue of the sustained suspension, Oando shareholders were unable to benefit from the positive sentiments in the market within this period. Should the shares have been freely tradable, a positive correlation between crude oil prices, the company’s corporate actions and the company’s share price would have afforded the over 270,000 shareholders an opportunity to profit from the inevitable price rally.

As Ugo Obi-Chukwu, a financial analyst and social media influencer rightly said “ Innocent shareholders have waited for six months to sell or buy more shares, but they couldn’t due to the excuse that an audit is being carried out by Deloitte.”

Experts have faulted the SEC’s implementation of the technical suspension on the grounds that the suspension of Oando’s shares pending a forensic audit does not follow SEC’s own rules. For example, during the MRS investigation by the SEC, a forensic audit was conducted on the company but the shares of the company wasn’t suspended. Under the NSE Listing Rules as well, there is in fact no mechanism for a Technical Suspension in the trading of listed shares. Even the company’s shareholders in South Africa were forced to partake in the prolonged suffering as the Johannesburg Stock Exchange (JSE), where Oando has a secondary listing, had to institute a full suspension of trading in the shares of Oando on the JSE, so as to be consistent with the trading status of Oando shares on the NSE.

Speaking on the SEC’s decision to lift the technical suspension, financial expert, Bismark Rewane the MD of Financial Derivatives said; “Technical suspensions were used in the past when there was a rights issue. Even if there were infractions by management you deal with it quickly, you don’t punish investors and shareholders for such a prolonged period.”

Mr. Babatunde Badmus, an Oando shareholder with the Pacesetter Shareholder Association commended the SEC’s decision. He said: “We are happy the SEC and the NSE have finally heeded to the pleas of minority shareholders like myself. It is unfortunate it took six long months to take effect, nonetheless we are pleased to finally be opportune to reap from the company’s positive operations over the last 6 months.”

Oando’s shares have witnessed a commendable 38% increase in four days of trading on the Nigerian Capital market. The company’s shares has also commenced trading on the Johannesburg Stock Exchange, meaning shareholders on both sides of the world can finally benefit from the positive operations of the company.

History has shown that when a company comes out of a technical suspension the norm is for shareholders to dump their shares as the value falls. However this has not been the case with Oando. Demand has far outweighed available shares – leaving one to wonder what the true value of Oando shares would be today if trading hadn’t been suspended for 6 months.

Oando’s positive activities, coupled with the rise in crude oil prices over the last six months cannot be ignored, just last week the Nigerian National Petroleum Corporation (NNPC) announced that a consortium consisting of Oando PLC and OilServe Limited had been awarded the Engineering, Procurement, Construction (EPC) mandate for the construction of a gas pipeline 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.

Oando also announced four profits in a row from its FYE 2016 results to its Q3 2017 results.  More recently the company 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.

On the day the technical suspension was lifted the company’s shares were over bid as noted by Ms. Ayotola Jagun, Chief Compliance Office and Company Secretary, Oando PLC in an interview with CNBC. She said; “On day one, the day the suspension was lifted, 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.”

Speaking on the controversy surrounding the lifting of the technical suspension Eng, Patrick Ajudua, Oando shareholder with the New Dimension Shareholders Association said; “It is worrisome how the conversation has shifted from this good news, Oando shares trading on the capital market, to the call for the Minister of Finance to be sacked. Shareholders should be happy because we have lost out the most. This is a major hurdle that has been crossed and should be celebrated. But instead troublesome and supposed Oando shareholders are not celebrating they are protesting this good news.  Why would any shareholder do that?  Should they not be asking for the swift conclusion of this investigation so Oando can focus on generating a profit and dividend for us shareholders? My hope and that of the members of my association is that SEC will conclude the forensic audit as soon as possible so that the company can focus on its business operations.”

Expressing his opinion, Mr. Tambari an Oando shareholder with the Sokoto Zone Shareholders Association said; “The lifting of the technical suspension is a breath of fresh air. Every true shareholder of Oando is delighted that we can finally reap a return on our investment. It is for this reason I doubt the authenticity of these shareholder groups saying the suspension shouldn’t have been lifted. Haven’t we suffered enough? The public knows that the company is viable, this is already evident in the price jump since the NSE commenced trading.”

The hope is that the forensic audit into Oando will be concluded as soon as possible and the results published. Shareholders have also expressed the need for the SEC to be more transparent in their operations to avoid the technical suspension lifting fiasco from happening again, and more importantly so that shareholders can finally put this issue to rest and reap a return on their investments.

Bismark Rewane further advised that the Commission should commit the necessary resources needed to conclude the forensic audit on Oando as the market cannot wait indefinitely and if there are any infractions, the Commission should deal with it and move on as a lot of people owe their livelihood to the company.