The Proshare Transcorp White Paper - 2007


Sunday, January 14, 2007     06:47PM / By Proshare Research


Download Report Here


Transcorp is a difficult company to analyse and this is so because there is no precedent (not exactly so but then what is exactly similar in decisions clouded with controversies) to benchmark the concept with locally.


For most analysts, it is better to sit on the fence and let the investors give their instructions. For the stockbrokers marketing the offer, it has simply been a case of see what happened from N1 to N6 (private placement) and now N7.50 (upon listing); all in less than 3 years? Do you know what it will be in the next few months and years? Are you aware that the oil block has not been factored into it? It perhaps appears like selling apparels at a Sunday Sales stand but it goes much deeper than that, as the report shows.


And for the media, it is a straight forward slam dunk from the PR firms who send out press releases that Transcorp is a finished product. At this time, there is no information about where to get and how to pay or what investor relations/FAQ exists.


No one, absolutely not one person has given a clear insight into how these figures were arrived at and what it all means. Maybe one person, the Rev. Olu Odejimi, the Doyen of the Stock Exchange (and CEO of Clearview Securities Limited) who gave the most intelligent and rationale explanation for his decision to buy and sell the shares at the Investment forum in London and on Ben TV whilst selling Nigeria to Nigerians and the world.


Not much is known about the company or its services except the service experience gained while lodging at Transcorp Hilton and a visit to their head offices in Lagos. The website offers controlled information and the other source of information is the newspapers, which frankly has inadvertently appeared more negative than informative; creating a siege perception of sorts. That however does not indicate that it would not do well, but it has a strong head wind ahead of it.


Chukumah Biosah, President of CEBABL Audit Group, based in Los Angeles and our trusted analyst replied at the onset to the request to do a report on Transcorp:

"To write any analysis on the company, we will need internal information from Transcorp regarding -

1)      Management structure (i.e. caliber of management);

2)     Competition - (MTN, Glo, etc);

3)     Performance of current business (i.e., Hilton - Abuja, Energy, etc);

4)     Review the financials of the competition and project Transcorp future revenue/performance based on MTN, Glo's current financials;

5)     Review other assets of Transcorp that would give it an edge over the competition; and

6)     Operational plans and strategies in place to introduce their cellular services"


He goes on, "Additionally, I believe Transcorp already has 18 billion shares outstanding, and upon the completion of the IPO they will have more shares on float. We would have to prove to investors that they can pay dividends without using borrowed funds. In light of the time it would take to complete this type of analysis, It can only be done at a great cost financial and manpower hours to the company.


To write about Transcorp therefore, it was instructive to get closer to the players and to take them on, raising issues ranging from the office canteen gossip to more fundamental and financial implication issues. It was also important to retain the objectivity that could allow assumptions to be laid in a manner that would allow conclusions to be placed in context and provide a basis of evaluation sometime down the line.


We have thus invested our time, money and resources to get this done for posterity sake and to be seen to have played our role in the Change & Transformation goals driving the creation of Proshare.


Even at that, the none availability of access and time to independently verify the information so obtained may create a challenge to reputations and could end up doing the firm a disfavour. But it is a task that must be done and that is what we sought out to do when we took on Transcorp in London, during their Investment road show.


Messrs Jide Iyaniwura, CEO of NigerianAffairs.Com and Funto Akinkugbe of made it possible for us to have an all-access clearance to investors, fund managers, and the larger diaspora group. The stockbrokers who came from Nigeria did a good job representing their constituencies and such include Nduka Nwonye (LB Securities), Hauwa Audu (Amyn Investments), Seyi Awe (Wema), Anne Omezi and her boss Henry (BGL) to mention a few. We are grateful to them for their insight.


We also spoke with Fund Managers in the United Kingdom, who did not mince words and action in showing their concerns as well about the offer and the need to answer the whats in it for me question they have to give to their clients. It is instructive to note that this group still had reasons to conclude that sitting on the fence was not a safe option in the long term....


Thus, we attempt the impossible - provide an unbiased review to guide your investment decision on the firm's stock. This is what you should be reading in the review/report we will be serving you.


The three-part report takes a no-holds barred approach that recognizes the historical and far reaching implication of this 'Animal' (to borrow the use of the term from Transcorp) on Nigeria's business and economic fortunes in the years to come.


Factually, the prospectus provides more than an interesting insight as well as contradictions that begs for clarifications. We have sought these clarifications from their officials and present our findings in a manner that allows you separate opinions from facts. 

Proshare Nigeria Pvt. Ltd.


The report is broken down into the following sections:

  • The Analyst Review of Project 'Transcorp' and the Business Proposition with comparable evidence both locally and internationally;
  • The Public Offer Proper vis-a-vis an investment decision model to suit the business proposition;
  • The venture capital company argument;
  • Adding up the numbers and the missing gaps;
  • Investors Questions and Concerns and why they persist;
  • Answering the political risk factor;
  • The London Road show/Interview; and
  • The what next question answered including our opinion and soft commentary.


Needless to add, we will issue our usual disclaimer as we have always done but you should find the document a useful guide in asking your fund manager all the right questions.


The offer ends on 31st January, 2007. There is enough time to wait.


In the meantime, if you have specific questions not yet covered in the lead article we will be happy to receive them.


Download Report Here


Transcorp  IR Page


Proshare Nigeria Pvt. Ltd.


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