Transcorp to Raise $1 Billion to Build Power Plants

Transcorp which has interests in industries ranging from agriculture to oil, plans to raise as much as $1 billion to build power plants as it seeks to triple profit in 2014.

“We think we can reach financial close by January 2015 and start construction” of a 1,000 megawatt gas plant, Chief Executive Officer Obinna Ufudo, 42, said in an April 11 interview in Lagos. The company will explore fundraising options including bank loans, selling shares or bonds, he said.

Nigeria sold control of 14 power companies to new owners last year including Siemens AG,Korea Electric Power  and Lagos-based Transcorp to attract private investment to reduce blackouts. Transcorp bought the Ughelli gas plant in the Niger delta and plans to boost its output to 700 megawatts by the end of the year after spending as much as $300 million on turbine repairs, Ufudo said.

An increase in power generation capacity will help treble pretax profit to 30 billion naira ($185 million) this year, Ufudo said. “With the kind of expansion we plan in key sectors we operate, our vision is to make about 160 billion naira in profit by 2018,” he said.

Transcorp was set up in 2004 to invest in industries in Africa’s biggest economy. The company is 44 percent owned by Chairman Tony Elumelu and its market capitalization has increased almost tenfold to 149.4 billion naira since 2008, according to data compiled by Bloomberg. The shares fell 0.8 percent to 3.86 naira by the close in Lagos yesterday.

Also, Transcorp plans to start the $500 million construction of three “international standard hotels” this year in the capital Abuja, Lagos and the oil-rich Rivers State and it will upgrade the existing 670-room Transcorp Hilton Abuja hotel, Ufudo said. The company has said it plans to build eight hotels under the Hilton brand by 2018.

“With improved occupancy and performance, our hospitality business is contributing to profit,” Ufudo said. “With Nigeria a strategic investment destination in Africa, we expect the hospitality business to continue to improve.”

A rebasing of the way Nigeria’s economy is measured for the first time in two decades showed that it’s the biggest on the continent, larger than South Africa’s, the National Bureau of Statistics said April 6. The country is Africa’s most populous with about 170 million people and also the continent’s biggest oil producer.