03/12/2013

How Tony Elumelu Made $123 million

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Tony O. Elumelu knows what’s he’s looking for.



According to Forbes, Elumelu—a Nigerian economist, banker, investor and philanthropist born in Jos, 1963 who earned his M.Sc. in Economics from the University of Lagos and later graduated from Harvard Business School’s Advanced Management Programme—made his first fortune by acquiring a small, struggling Nigerian commercial bank and building it into the United Bank of Africa Group, a leading financial
services institution with operations in several African countries as well as New York and London. He stepped down as the bank’s CEO in 2010 to focus on investing in African businesses through his private investment vehicle, Heirs Holdings. At the same time, he set out to groom Africa’s next generation of business leaders through his Tony Elumelu Foundation.

As a businessman, Elumeluhas been recognized for hisshrewdness and dexterity. This is evident in the recent$123 million he made in the past 21 days from the appreciation of Transnational Corporation of Nigeria Plc stocks. Transcorp is an emerging Nigerian conglomerate which holds investments in hotels, power and agriculture. One could say he got lucky, but look closer and it appears this was a carefully planned, strategic move.

Talks about privatizing Nigeria’s power sector have been in the air since the Obasanjo regime. Elumelu, sensing that privatization of the power sector was inevitable—and maybe sooner rather than later—decided to put his money on a company which is well poised to acquire some part of the power sector. His search came to an end when he found TransCorp.

Elumelu began amassing shares in the company in April 2011 through his wholly-owned proprietary investment vehicle, Heirs Holdings. In September 2011, he was appointed chairman of the company, promising to diversify the company’s business interests and deliver value to shareholders – promises he seems to have delivered on. He currently owns over 5.7 billion shares of the company (5,745,890,693 to be exact, according to Transcorp’s latest corporate filings), held in his own name and via Heirs Holdings, equating to a 22.26% stake, making him the company’s largest individual shareholder.

Having put things into place, time was the final ingredient. He settled down like a frog in the pond, waiting patiently for an insect to land on a nearby flower.

The insect landed on the 3rd of November 2013 when Transcorp took over Ugheli Power Plc in Delta State for $300m. With Elumelu at the helm of affairs investors began to see the potential of Transcorp shares—which began soaring even before the acquirement of Ugheli Power.

Transcorp’s stock on the 1st of November was trading at N1.87 ($0.01), and at the close of trading on Thursday 21st of November 2013, the stock was trading at N5.35 ($0.03).

Currently, investors are scrambling for the stock in anticipation of the long-term impact the new acquisition will have on Transcorp’s financial results.

Through his astuteness, Elumelu has made $123 million since the beginning of this month. His shares in Transcorp alone are now valued at N30.7 billion or $188 million, and climbing.

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