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| One of Caverton |
The listing exercise, which will be by introduction, will be done next week Tuesday (May 20, 2014) and RenCap Securities Nigeria Limited is the stockbroker to the issue.
The listing is a major plus for the Federal Government policy of encouraging local capacity and ownership in the oil and gas sector. The company’s 3.35 billion shares will be listed for trading at N9.50 per share. The listing will add about N32 billion to the value of the NSE market capitalisation.
Coming barely one month after the Seplat Petroleum Development Company plc listing, analysts said at the weekend that the coming on board of Caverton, which operates in the marine and aviation logistics sectors of the Nigerian oil and gas industry, would further deepen the market, allow investors diversify across sectors, and engender confidence in the stock market.
A senior executive at the NSE, who confirmed the listing to BusinessDay at the weekend, also confirmed that Caverton would be “listing by introduction”.
The listing of Caverton, market analysts say, is a welcome development which offers investors another opportunity for higher returns and further proves the impact of efforts by the business development unit of the NSE in attracting more companies.
Caverton Group was formed to acquire Caverton Helicopters Limited and Caverton Marine Limited, both of which were already operating in the Nigerian offshore oil and gas logistics industry.
Analysts who spoke to BusinessDay on Caverton’s listing said it was a welcome development for the market, as well as the company. They further said that the company would enjoy first-mover advantage in terms of liquidity.
The Caverton Offshore Support Group has a global workforce of over 650 employees. With its rapidly expanding fleet of aircraft and ocean liners, as well as its acquisition of key offshore assets and strategic partners, the group is able to provide a diverse range of services to its clients, ensuring their objectives are completely fulfilled, offshore to land.
Commenting on the development, Rasaq Abiola, market analyst at Associated Discount House Limited, said: “The listing of Caverton Offshore, which follows the successful IPO of Seplat, reinforces the recovery of the primary segment of Nigerian equity market. Even though investor sentiment is relatively weak at secondary market, as reflected in the 5 percent YTD loss on the NSE Index, new listings reflect the improved confidence of issuers, following the twin stellar performance of Nigerian equities in 2012 and 2013, when the NSE Index rallied 35 percent and 47 percent, respectively. More so, investor appetite for indigenous upstream oil and gas companies (with sound business fundamentals and corporate governance) is quite compelling, as demonstrated during the Seplat IPO with impressive domestic investor participation.”
According to him, “You will note that the oil and gas sector is not adequately represented on the NSE, representing less than 3 percent of market capitalisation, thus denying the Nigerian public and foreign portfolio investors the opportunity to participate in the Nigerian oil and gas sector. Notably, increasing acreage/asset acquisition and rising production activities of indigenous companies in the upstream sector should further domesticate oil and gas businesses in the country, with expectation of further listing on the NSE, especially as the indigenous companies relatively depend on local funding in both equity and debt.”
Femi Ademola, head, research and intelligence, BGL plc, told BusinessDay that Caverton’s listing was another fantastic thing that would be coming to the market.
“We don’t really have so many companies from the aviation sector. Investors want to invest across board – all the sectors. It is a good thing for the market. It is a welcome development. For the company, listing gives them a lot of opportunity for development. It also makes a lot of difference, particularly for sectors like this that have not been represented fully in the market,” said Ademola.
Also commenting on the listing, Sewa Wusu, market analyst at Sterling Capital, said, “This is a good one that is coming to the market at the right time. The company will enjoy first-mover advantage. It is a positive one. The market offers them a good opportunity to develop their business model.”
Wusu observed that there was huge business opportunity for the Caverton Group, particularly now that the IOCs were divesting their investments, adding that the huge business opportunity also required huge finances.
“The listing will afford the company the opportunity to access funds and play big in the industry they operate. It will also entrench good corporate governance in the way the Caverton Group does business,” Wusu said.
Having met all NSE and other regulatory requirements, Caverton Offshore Support Group has been given approval to list by introduction on the main board of the exchange.
Caverton Offshore Support Group (Caverton) is the holding company of Caverton Helicopters and Caverton Marine Limited, two Nigerian companies that have within a short period grown dramatically to become industry leaders in the oil and gas aviation and marine sub-sectors, two highly technical and capital intensive areas previously dominated by foreign firms.
“We are extremely pleased as Caverton enters its next phase of growth as a listed company,” said Aderemi Makanjuola, chairman of the company. “Leveraging on our expertise and execution capabilities, we plan to embark immediately on fleet expansion and the development of new service areas in the offshore marine and aviation sectors.”
Makanjuola said they were also keen on exploring entry into new markets. “We plan to create a balanced and diversified portfolio and we are pleased to have strong technical partners on board with us. This is in line with our strategy for sustainable growth and we are confident that the company will continue to achieve its growth aspirations while fostering indigenous participation in the Nigerian oil and gas industry,” he added.
Caverton’s rising business profile has been powered by strategic partnerships, highly-skilled management and staff, investment in cutting-edge technology and facilities, and strong financial performance. In the 2012 financial year, the company’s turnover rose 47.6 percent to N16.132 billion, from N10.928 billion in 2011. Profit after tax and exceptional items jumped to N1.035 billion, from N60.373 million in the previous year, an increase of 1,625 percent.
“As a wholly-owned Nigerian company, we have demonstrated that when given the opportunity Nigerians can compete favourably with the best of foreign nationals. We are desirous of opening the doors of opportunity to so many other Nigerians. Becoming a publicly quoted company allows us to do more in this regard and permits us to add more value to the country and its economy,” said Makanjuola.
Even though its operations predated the passage of the Local Content Act by many years, Caverton has been seen as the poster-child of indigenous capacity and ownership since 2010 when one of its subsidiaries, Caverton Helicopters, edged out long-established foreign operators to win a $648 million, multi-year contract from Shell Petroleum Development Company for the supply and operation of seven helicopters. Won after a rigorous competitive bidding process, it is on record as the biggest contract ever awarded by the oil multi-national to an indigenous company.
The Shell contract opened the floodgate for Caverton, with more contracts pouring in from other oil majors such as Chevron, ExxonMobil, Total and Addax Petroleum. In 2013, the company commenced its first international operation after it won the contract to provide passenger transfer and pipeline surveillance services to the Cameroon Oil Transport Company (COTCO), a subsidiary of ExxonMobil.
Culled from BusinessDay
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