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The oversubscription of Oando Plc’s Rights Issue announced on
Thursday was expected, some operators at the Nigerian capital market have said.

Gbenga Emmanuel, a portfolio manager at WealthZone Company, said
the 128 per cent subscription which the company recorded during its Right Issue
offer was “not surprising” to us market operators.

“We had predicted that the Right Issue would be oversubscribed
because investors’ interest in Oando, an indigenous oil company in Nigeria with
upstream and downstream operations, is still very strong,” he said.

Mr. Emmanuel said many of the company’s shareholders bought
additional rights during the offer. “Only few of them sold their rights,” the
finance analyst added.

Tunde Oladapo-Dixon, Chief Executive Officer of StockPicks
Consulting, also said the company’s Right Issue was oversubscribed because
“about 80 per cent of subscribers took their rights while some sold off their
rights.” Oando issued 301,694,876 ordinary shares of 50 kobo each at N70 per
share to existing shareholders who names appeared on the register of the
company as at the close of business on December 18, 2009. The issue opened on
January 25 and closed on February 19.

Indication of confidence

Oando, one of Nigerian energy groups, yesterday announced that
its recent Rights Issue was oversubscribed. The company, which has a primary
listing on the Nigerian Stock Exchange and a secondary listing on the
Johannesburg Stock Exchange, in a statement, said the Rights Issue that was
expected to raise N21 billion returned 128 per cent subscription.

Wale Tinubu, Oando’s Group Chief Executive, said, “We are
extremely pleased with the positive reaction to our rights issue in spite of
the seeming apathy to capital market investments.

This is an indication of the confidence of investors in our
ability to optimise resources to create superior returns. These funds will
complement our ongoing strategy of investing in high margin businesses as well
as supporting our expansion plans to take maximum advantage of opportunities
within Africa’s energy landscape,” he said.

Raising more funds

Seeking shareholders’ approval to raise the fund last August,
Mr. Tinubu, said the aggressive growth saw the company become highly leveraged,
and would therefore need to pay down and restructure some its loans under
better terms.

He added that the company also needed to raise further capital
from debt and equity financing sources to develop its new acquisitions that can
diversify its revenue stream.

As a result, the shareholders gave their approval and support
for N220 billion capital raising exercise last year. Specifically, the N20.4
billion begin the first phase of the capital raising programme, according to
Mr. Tinubu, “is an important step for Oando towards refinancing the acquisition
of upstream assets, providing operational capital to fund the operation of
upstream business and short & medium term investments in its gas and power
business segment.” He explained that after the right issue, what will follow
will be a combination of international debt and equity offerings through which
Oando hopes to raise between $500 million and $600 million. The final phase, he
added, would be a public offer later in the year.

High earnings

Oando, which has six business divisions -Exploration &
Production, Energy Services, Gas & Power, Marketing, Supply & Trading,
and Refining & Terminals, on April 12, announced results for the year
ending December 31, 2009. Its Pre-Tax profits increased by 21 per cent to
N10.1billion compared to N8.3 billion same period in 2008, while earnings per
share increased by 23 per cent.

In 2004, Oando raised N16 billion, the highest at that time by a
non-financial institution, through a rights issue and public offering at that
time. The funds realised accelerated the company’s transformation from a
downstream business into one of Nigeria’s largest indigenous energy groups.