Transcorp Power's recent listing on the Nigerian Exchange (NGX) has unleashed a controversy, spotlighting possible governance concerns and causing investor unrest.

Central to the unfolding drama is Tony Elumelu, a luminary in Nigeria's corporate firmament. Some critics allege that Elumelu's actions could potentially marginalise minority shareholders to the benefit of larger stakeholders in their expense.

The roots of the controversy are in Elumelu's broader business strategies, notably his decision to list Transcorp Power as an independent entity on the NGX. The listing enhances Transcorp Power position as a leading player in the Nigerian energy sector, but critics have questioned the equitable distribution of equity and the quality of corporate practices in Nigeria, claiming  Elumelu's holding UBA Plc have, in their view, side-lined minority shareholders.

Opinions vary widely on Elumelu's motivation for listing Transcorp Power. On the one hand, some think he wants to follow in the footsteps of Nigerian billionaire businessman and activist investor Femi Otedola, an Carl Icahn-like figure whose company, Geregu Power Plc, has become a leader in Nigeria's energy market. On the other hand, some investors believe that Elumelu is mainly looking to increase the paper valuation of his own wealth and land a spot on the Forbes billionaires list, in a meme discussed on social media.

However, Elumelu's Heirs Oil and Gas company faces significant challenges, losing a reported NGN1.8bn daily ($4.3mn) to oil theft after acquiring a 45% stake in the OML 17 onshore oilfield. These losses and other issues could impact his net worth valuation and purported ambitions to be included in the Forbes rich list.

Critics have also pointed to the small size of the listing: a mere 0.05% of the total shareholding. They argue tiny free float opens up the potential for market manipulation that could artificially balloon the market valuation of the company on paper.

A spokesman for UBA told bne IntelliNews: “This was not an IPO. This is only a introductory listing and the shareholders have every right to do that.”

The small free float nevertheless led to a $1.1bn valuation for the company following the float, which was touted by company executives as a strategic initiative to unlock shareholder value.

Minority investors also complain that there was no clear share allocation strategy for minority shareholders during the book building process that could have led to unequitable allocations of shares during the listing.

The Transcorp Power listing was organised by United Capital, which acted as lead financial advisor and lead broker. United Capital, controlled by Elumelu's family office Heirs Holdings and has been a preferred choice for other financial transactions involving Elumelu’s assets. In previous bond issuances by the group, United Capital also served in a pivotal capacity in the placements.

A UBA spokesman pointed out that the regulator had no complaints about United Capital acting as lead broker and highlighted that its one of the country’s biggest and most respectable banks.

Transcorp Power plays a significant role in Nigeria's electricity supply chain, making the company’s corporate governance a national issue and its acquisitions of the Ughelli and Afam power plants have been closely scrutinised.

A veteran investment broker in Africa, who preferred to remain anonymous for fear of potential backlash, said: “The situation with Transcorp Power not only highlights the challenges in the Nigerian energy sector but also raises significant questions about the broader corporate governance landscape in Nigeria. It's imperative that we see more transparent and equitable practices in the market to maintain investor confidence and ensure the sustainable growth of our economy. The limited release of shares to the public raises serious questions about the transparency and fairness of this listing. If Mr. Elumelu's motivation behind the Transcorp Power listing is predominantly personal gain, it undermines the very principles of corporate governance and equity. Such actions not only jeopardise investor trust but also set a dangerous precedent for corporate practices in Nigeria.” The listing has ignited a broader debate about corporate governance practices in Nigeria, with implications that extend far beyond the immediate stakeholders in the Transcorp Power listing. Pundits hope the controversy will shake up the market and encourage a move towards better corporate governance standards for Nigerian commerce in general.

The UBA spokesman strenuously denied any wrongdoing and stressed that the listing was carried in keeping with the regulations and was conducted in a fair and equitable manner to the benefit of the minority shareholders.

This article has been updated to include comments by UBA spokesman.

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