When is a corporate organisation
expanding business frontiers, breaking new grounds and taking real
business risk in a positive sense? Chief Mike Adenuga and his
ever-expanding empire is perhaps one good example of how grit, courage,
foresight and resilience can be a game changer. Think back to the days
when this particular businessman broke new grounds by daring to walk
into the then scary world of telecoms. There were initial controversies,
of course, but his Nigerian firm was the only indigenous organisation
that rose to the occasion at the time. It was also the first player in
the sector to show Nigerians that per second billing is not possible for
GSM calls.
This is important to
note, because many of our banks and corporate organisations are actually
a motley crowd of doubtful positive impact on the economy. They are all
posting incredible profits based on ‘phoney money’, procured through a
rentier business climate and economy that makes no impact on job
creation, enablement of SMEs and the capital needs of genuine investors.
This is not to say that anyone is quarrelling with profits. In fact,
the thing to protest against would be the absence of profits in any
business. But if you look around you and ask yourself questions about
the actual impact of some of the business organisations that post the
highest profits, in terms of job creation and corporate social
responsibility, you are bound to scratch your head in perplexity.
Without
the government and the money, some of our blue chip companies
(allegedly blue chip, that is) make you have a rather depressing picture
before you. As going concerns, many of them do not have the strength of
a feather. The government is the convenient crutches with which they
have been sneaking past the finishing line, on the pretext that they are
long distance runners. Look more closely and you may hit upon the
conclusion that many of them are all ‘chip’ companies and no blue. They
merely prey on a prostrate market with lax rules and governance
paradigms, strutting about with badly inflated ideas about what they
really are. But we are digressing from today’s business.
On
April 17, 2012, this column took up a matter that was dominating the
news outside the country at the time. It concerned Alhaji Aliko Dangote,
when, according to the Financial Times, he was about to kick off the
listing of “his $11 billion cement business on the London Stock Exchange
… and loosen his control on the group”. The paper also gleefully
announced that the businessman was about to free-float a 20 per cent
stake in his cement firm. His is still the largest cement producer in
sub-Saharan Africa. For good measure, as announced at the time, the
company was doubling capacity that year, to 21 million metric tonnes. It
was then said: “For the record, Dangote Cement has three plants in
Nigeria and 70 per cent market. It also has contracts to build factories
in eight African countries.”
Notwithstanding
the controversies, and are many, regarding the Dangote business chain,
the article in question was a celebratory reaction to the perceived
dare-devilry of Dangote, who was able to get himself taken seriously in
the serious world of global stock market. Part of the stunning news at
the time was that the main conglomerate, Dangote Group, was
simultaneously changing focus. The company was said to have resolved to
concentrate on the three core areas of (1) food, (2) infrastructure (3)
mining. It was also poised to sell some 80 per cent of its stake in its
food chain (sugar, salt, flour, rice and pasta), at the time. There was
also the news that the organisation wanted to quadruple its profits
within for years. But that is Dangote and anyone can check up on that
endeavour.
Then Ijeoma Nwogwugwu
recently wrote in her column “Behind the Figures”: “History is about to
be made in the oil and gas and financial services industries”, as she
announced the simultaneous listing of the ordinary shares of Seplat
Petroleum Development Company Plc, a fast-growing indigenous oil and gas
company, on the London and Nigerian Stock Exchanges. She said, further,
that Seplat would raise at least $500 million through the initial
public offer (IPO) that would be used to fully repay its shareholders’
loan of $48 million to Maurel et Prom of France. According to her, “The
balance of most of the net proceeds of the global offer would be
utilised by Seplat for acquiring and developing new acquisitions of oil
acreages, and/or pay down any additional debt raised in connection
therewith of both onshore and shallow offshore acreages, assets or joint
venture farm-ins.”
This is
suggestive of not just credibility but pedigree and strategic
positioning for global relevance on the part of Seplat. No company
becomes a player in the global business environment because the
government likes or dislikes it. It is an inclement environment, where
no one gets piggy backed across tough terrains. If anything, those who
make it unto the platform must break out of the protection and
restricting paradigms of particularistic national economies. For
instance, the aforementioned article on this column noted that the core
focus of the strategic footwork within the Dangote Group was to expand
the economic space and create opportunities (not charities) for a mix of
competent players. “These must be serious economic actors and
commercial interests with the capacity to create and draw life lines,
make contributions and widen the stakeholder platform”, as the Dangote
Group was not looking for who to swindle, but was moving into “tougher
business terrains with global, and stringent entry requirements.”
It
is the same for Seplat, except that the latter has actually taken
matters well beyond where Dangote is at the moment in the same market.
The company is seen as capable of meeting the prime paradigms of
international standards in its operations. The news out there is that
Seplat has a most reassuring corporate governance structure, as well as a
board of directors and management team that anyone would be proud of
anywhere in the world. This is probably not surprising, because there is
no other way the company would have survived six months of unmitigated
scrutiny by the UK’s Financial Conduct Authority (FCA) and given the
green light for the London listing.
We
also heard this from Ijeoma that Seplat enjoys the rare distinction of
being the first Nigerian company operating strictly in the upstream oil
and gas sector that would be listed on the main board of the London
Stock Exchange (LSE), as well as the Nigerian Stock Exchange (NSE). Hear
her: “Another firm, Lekoil, is Nigerian but its shares are listed on
the Alternative Investment Market (AIM), which is the LSE’s
international market for smaller growing companies”. But no one was
talking about these firms at the time of Dangote’s move. At the time
Morgan Stanley and J.P Morgan were co-leads for the London entry, in a
move that required Dangote to meet globally competitive corporate
governance requirements for a premium listing. Dangote had the unusual
mindset at the time of ceding the chairmanship of the board to what the
Financial Times described at the time as “somebody else, a professional
who is well respected within investment circles”. I hope he/she won’t be
a ‘technocrat’, because business is global politics at a certain
level”.
But back to Seplat! Its dual
listing is seen by industry watchers as capable of opening the
floodgates for a swing in the profile of actors within the NSE. Many oil
and gas firms which the management of the NSE has been wooing for some
time to get listed are likely to come on board. Ditto for “other
sub-Saharan companies seeking to raise capital from international
markets”, according to Behind the Figures. This is all rather exciting.
The
stories of every big business with global impact always have several
versions – both the revised standard and the unrevised, sub-standard
versions. The part of it that interests us here is the capacity for
resolute, daring investments and business adventure in a new world that
has very stringent entry requirements. The essential point is that we
may well be seeing a greater tendency on the part of Nigerian businesses
towards business models that look far into the future; and with a lot
of commendable realism.
Seplat has
been in existence for just five years, but it has grown to become the
largest indigenous independent operating firm in the local environment.
The stature and credulity of its shareholders did a lot to drive its
meteoric growth and quick dominance. It is all well and good, even
commendable and perhaps something to really brag about. But, going
forward, Seplat must focus on sustaining the gains, breaking even newer
and more virgin grounds, driving CSR and remaining on course.
On
the question of who next will make news by taking the global financial
firmament by storm, we have no doubt that Adenuga may step forward.
Thisday Live Column: Edifying Elucidations By Okey Ikechukwu
Email, okey.ikechukwu@thisdaylive.com
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