ADEREMI'S NOTEBOOK

— Ngozi Okonjo-Iweala talks about the opportunities in Africa. #

Transcorp Nigeria: Still optimistic (3)

When I posted about Transcorp earlier this year, I said May 2007 would be a crucial month for the company. The hype about Transcorp has come and gone.

Bernard Longe is on compulsory leave due to an investigation at First Bank of Nigeria over a loan granted to NITEL whilst he was CEO. The Transcorp Board said the process was initiated in compliance with a Nigerian Stock Exchange (NSE) directive about indicted/dismissed CEO of quoted companies.

Earlier this month, Tom Iseghohi was appointed CEO, no word on Bernard Longe. Transcorp has had 2 CEOs in the last 2 years. Good luck, Tom.

It seems Transcorp managed to secure 76% of NITEL despite varying reports suggesting it only owns 51%. Last month, it was reported that BT had quit as its technical partner. Transcorp released a press release stating that first stage of the agreement with BT had simply finished and was hoping to extend it.

The company also stated it was “pursuing opportunities to bring in potential strategic investors into NITEL and M-tel”. A week later, the Independent reported that Transcorp was close to sealing a $1.2 billion deal with Vodacom. The deal would probably give Vodacom control of M-tel and a 27% stake in NITEL.

With this deal on the table, I’m still optimistic. If this deal goes through, it will inject the much needed cash into indebted company whose IPO was not well received (compared to Dangote Sugar, despite the worldwide roadsow) and will bring in Vodacom, an able partner, who has been keen to enter the Nigerian mobile telecom market for some time.

Phat City Bonuses (2)

Peter Hain, Northern Ireland Minister has suggested “City firms should donate two-thirds of their bonus pots to charity rather than giving employees six-figure bonuses”. We all know this is a very sensitive subject.

People (mostly “city workers”) have been making their views known on here. Below are some interesting comments.

‘Two-thirds ? Why stop there ? Take the lot. After a while I’ll be able to register as a homeless person, receive ‘charity’ - and probably make more money doing nothing than I did working my nuts off !’.

This is not bad idea if you think about it. No?

“Big buck bankers already give more than enough of their hard-earned dosh to the taxman. I suggest Mr Hain speaks to the Treasury about redirecting some more funds to the poor. We are already over-taxed (income tax, national insurance, council tax, VAT, stamp duties, death duties, congestion charges, parking fees, etc) - the government needs to look at how they spend all this money before thinking of stupid ways to raise yet more revenue, which will doubtless also be wasted”

Mr Hain, please speak to Mr Brown. Maybe he wiil agree to redirect some of those funds to your department.

Rubbish tax, coming soon.

TransCorp Nigeria (4)

100% Nigerian. 100% World Class

Beautiful Slogan, you would agree. The slogan could become a problem if TransCorp decided to expand outside Nigeria. For now, TransCorp is 100% Nigerian, not sure 100% World Class.

A friend told me about TransCorp’s roadshow presentation at St. James Park in London and I gladly agreed to attend. Naturally I was excited about the attending my first Nigerian roadshow. I made a few observations; allow me to share them with you.

The IPO of TransCorp should be the gold standard for other companies looking to “go public”. The IPO prospectus omitted crucial information. It failed to state the any “meaningful” historical accounts for the company. After the Cadbury Nigeria incident, accounts should be detailed and thorough. The IPO prospectus should have some historical accounts for NITEL and TransCorp Hilton to give prospective investors an idea of the profitability of these businesses. Forecasts are only useful when compared with historical accounts.

At the roadshow presentation I attended, the TransCorp Executives could not confirm the number of subscribers on the M-tel network. I find that very odd. Are they suggesting they paid good money without due diligence? This report offers very little comfort to prospective shareholders suggesting subscribers in 2006 stood at 200,000 from 1.2 million in 2005.

The same report suggests 75% of NITEL was sold to TransCorp. In the IPO prospectus, TransCorp owns 51% of TransCorp Telecomms. TransCorp Telecomms owns the 75% of NITEL. So TransCorp owns half of the 75% stake? This is poor disclosure.

The roadshow presentation was not what I expected. Standing for thirty minutes and listening to someone defend Obsanjo’s Tata idea for Nigeria was not cool. The TransCorp Executives failed to communicate their ambition for the company. I’m more optimistic but let’s see what happens in May first.

Aston Villa sold to Randy Lerner (0)

I have two GOLDEN RULES when it comes to investments;

1. Never invest in football teams
2. Never invest in Airlines

I broke rule No.2 once…quite sure I didn’t make money on it. As Richard Branson, founder of Virgin Atlantic, once responded to the question of how to become a millionaire;

Start by being a billionaire and then buy an airline.

I digress. Back to football. By the way, I support Arsenal.

Men, when did Americans begin to love football (called “soccer” in America and Austrialia) so much. First, Malcolm Glazer (owns Tampa Bay Buccaneers). Now Randy Lerner (owns Cleveland Browns American football team).

Today, Aston Villa’s board recommended that shareholders accept Randy Lerner’s bid of £63 million after beating three rival bidders including Michael Neville. A quick scan of the RNS statement shows that Randy Lerner is paying 547p in cash per share. This represents a 47% premium to the share price on the 16 Sept 2005 (not sure why they are using this date as the approach was announced on 1 Sept 2005).

Now look at the share price graph since 1998;

© Selftrade
Ofcourse if you invested in 2003 when everyone else was just recovering from tech bust, you’ll be laughing all the way to the bank.

The future looks very bright for Aston Villa. Recently appointed Martin O’Neill as the club’s manager with the Lerner promising to make £20 million available for new players.

Read more:
Yankee Invasion Or Lifelong Fan For Villa Park Boardroom?
Sentimentality gets us nowhere, Michael

Obasanjo and TransCorp (9)

I got emailed this article about Obasanjo and TransCorp. We all know OBJ oversaw the creation of Transcorp based on South Korea’s chaebols.

There is yarn* that OBJ owns $9 million TransCorp shares. TransCorp recently acquired the state telecoms giant, Nitel in a bidding process most observers believed wasn’t very transparent. That was a shame, however I don’t understand why the presidential spin doctor doesn’t know whether OBJ owns shares or not in TransCorp.

A presidential spokeswoman said she did not know if the president owned shares in the company, and the company also denied knowledge of any presidential holding.

I thought spin doctors were briefed before press conferences.

As if that wasn’t enough, I don’t understand why TransCorp doesn’t have a shareholder list.

Transcorp spokesman Adedayo Ojo said the company did not have a full list of shareholders: “No one in Transcorp can talk about what the president has or does not have.”

Is this dude kidding me? TransCorp is a private company. They intend to list on the Nigerian Stock exchange soon, at least the prospectus should detail their existing shareholders. I hope so anyway.

So “Does Nigeria really have hope”?

*yarn, slang ; talk on the street, rumour

Luke’s Paradise Syndrome (10)

Luke Johnson has an interesting piece in the telegraph today titled ‘What’s Paradise for a plutocrat?’, in the article he details the different ways by which people (wealthy individuals) employ to enrich their happiness.

I’m told there is a disease called Paradise Syndrome. The symptoms consist of a feeling of dissatisfaction - despite the patient having achieved all their dreams. Presumably those suffering from this terrible complaint think they cannot find any new challenges. They have ascended Maslow’s Hierarchy of Human Needs but there are no more mountains to conquer. For some, it seems, even paradise is not enough.

One of the few concepts I was able to pick up in my management class last year was Maslow’s Hierarchy of Human Needs. Abraham Maslow carried out his investigations into human behavior between 1939 and 1943 and put forward ‘Hierarchy of Human Needs’ which in simple terms means that as the basic needs of humans are met humans desire higher needs.

He reviews all the different ways from donations to Political Parties (thereby receiving honour) to owning a football club as well as giving it all to your children.

Football clubs: Extravagant playthings that mostly deliver misery to their owners. I did business with one fellow who told me that buying a club was the worst mistake he had ever made - even more painful than two failed marriages.

There you have it. Never invest in a football, no matter how tempting it is. (not even Manchester United - maybe Arsenal.)

Giving it to relatives: Spoiling children rarely improves their character. And deadbeats who hang around waiting for an inheritance are not very admirable.

Well depends on how you want to look at it. I guess he is right, it is probably better to give it all away to a good cause because most other so-called pleasures will surely bring disappointment.

Come fly with me (0)

Richard Branson’s Virgin Group has formed Virgin Galactic with the intent to take the average man to Space. It does not come cheap, apparently I will need around £115,000 in the bank before I can speak to Virgin Galactic.

if (2)

If…
(with apologies to Rudyard Kipling)^#

If you can keep your shares when all about you
Are selling theirs, and telling you “Sell too”.
If you can trust your savvy when all doubt you,
But with your postings make them nervous too.

If you can wait, and hold, with real devotion,
And being ridiculed just not respond.
If you feel safe to keep the shares you’ve chosen,
And shrug away all thoughts of being wrong.

If you can find the strength to watch your profit
Erode from all the stocks and shares you’ ve bought.
If you stay calm and keep your fingers off it -
Forget the “rules of trading” you’ve been taught.

If you can see no economic blunders,
If you can turn your back upon the bears,
If you are really sure your shares are wonders,
You simply have to keep, and ramp, those shares.

If you can fill the unforgiving minute
With watching Markets fall and traders run,
You’ll put your earnings and life-savings in it,
And, which is more, you’ll soon be broke, my son.

^#This adapted peom was posted in Shares Forum. The original “If” by Rudyard Kipling can be found here.

A Kenyan Post (0)

I always thought that meeting a Nigerian blogger from Lagos would be interesting. I remember when I used to live in Lagos, just walking on the street used to make me laugh, there was always something lively going on. Although I am yet to find one, I have however come across the Unganisha by Ashok, a Kenyan whose stories remind of the good old days in Nigeria. The stories he tells can be easily compared to listening to my Dad and his friends talk about their business and social experiences. I can remember my Dad telling me about his experience while he was a trip and a magician (allegedly) offered to turn 50,000naira to a million naira.

A Rough guide to the Kenyan Stock Market. The golden rule for any stock market is to think long term, day trading is not for everyone and I would know.