Heirs Holdings’ $1.1bn Oil Mining Deal Renews Confidence in Nigeria’s Economy, Analysts Say

The investment of over $1billion by Heirs Holdings (HH) in the acquisition of the strategic OML 17 from Shell, ENI and Total, has been described by various analysts as a positive affirmation of confidence in the robustness of the Nigerian economy.

The analysts described the deal as a welcome light on the opportunities that are available in Nigeria, especially given the increased pessimism globally and in Nigeria.

They highlighted the credentials of Heirs Holdings as a committed indigenous business and the presence of Transcorp, Nigeria’s largest listed conglomerate, with over 300,000 shareholders in the transaction.

According to them, the deal further demonstrates the ability of the Tony Elumelu-led Heirs Holdings to spearhead Africa’s economic resurgence amidst the calamity posed by COVID-19 pandemic.

The deal, which was announced on Friday, saw Heirs Holdings, the leading African strategic investor, in partnership with its affiliated company, Transnational Corporation of Nigeria Plc (Transcorp), acquiring a 45 per cent participating interest in Nigerian oil licence OML 17 and related assets, through TNOG Oil and Gas Limited (a related company of Heirs Holdings and Transcorp), from the Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and ENI.

The remaining 55 per cent stays with the Nigerian National Petroleum Corporation (NNPC). In addition, the Heirs Holdings Group will take over operatorship of OML 17, demonstrating the strength and quality of the industry team assembled by Elumelu’s group.

According to the analysts, the acquisition again shows Heirs Holdings’ strategic intent in relation to the Nigerian energy sector – to ensure that Nigerian natural resource assets are deployed to Nigeria’s power network, driving broad-based economic growth.

Speaking with THISDAY, Head of Research at Agusto Consulting, a pan-African credit rating agency, Mr. Jimi Ogbobine, stressed that looking at the wider issues in the economy as well as the disruptions caused by the COVID-19, the transaction was good for the deal book.

He said: “It shows that COVID-19 has not shut down the deal books. Since March last year, the number of deals in the oil and gas slowed down and so this deal was a good announcement coming at the beginning of the year.

“Secondly, this is a first major private sector acquisition in President Muhammadu Buhari’s second term and it think it is very good for the Nigerian oil and gas space. This will improve confidence in the oil and gas sector and we hope to see more deals in the later part of this year.”

Transcorp is one of the largest power producers in Nigeria, with 2,000 MW of installed capacity, through ownership of Transcorp Power Plant and the recent acquisition of Afam Power Plc and Afam Three Fast Power Limited. Transcorp closed the $300 million Afam acquisitions in November 2020.

Elumelu spoke of his satisfaction and pride in closing the deal, as a Nigerian and Niger Delta indigene.

He stated: “As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria.”

Heirs Holdings was advised by Standard Chartered Plc, as Global Coordinator, and United Capital Plc, with a syndicate of lending institutions, including Afreximbank, ABSA, Africa Finance Corporation, Union Bank of Nigeria, Hybrid Capital and global asset management firm, Amundi.

The deal also involves Schlumberger as a technical partner and the trading arm of Shell, as an off-taker.

“Heirs Holdings’ ability to bring together global and African investors, in one of the biggest African deals of the last 10 years, is a tribute to its professionalism and determination. It reassures global investors of the country’s untapped investment opportunities and affirms the company’s commitment to improving lives and transforming Africa,” one analyst said.

Heirs Holdings has been at the forefront of Elumelu’s Africapitalism philosophy, championing the private sector’s leadership in developing Africa.

TNOG Oil and Gas, HH’s latest investment and addition to a fast-growing and successful group of investee companies across energy, financial services, hospitality, real estate, and healthcare sectors, will create thousands of jobs for youths nationwide, expanding its current 30,000 employee database across its portfolio companies.

TNOG Oil and Gas will also extend Heirs Holdings’ “doing good, doing well” commitment to developing the communities of its operations through pillars of entrepreneurship, youth development and community building, pursuing an indigenous approach to catalysing development in host communities, an insider told THISDAY sunday.

Peter Uzoho

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