SEC Approves HH Capital’s MTO For Transcorp Shares

The Securities and Exchange Commission (SEC) has officially approved HH Capital Limited’s mandatory tender offer (MTO) for shares of Transnational Corporation Plc (Transcorp), marking a significant regulatory milestone in the ongoing shareholder restructuring of the conglomerate.

With this approval, HH Capital is set to tender 2,032,399 shares, representing 0.02 percent of Transcorp’s total outstanding shares, to existing shareholders at a slight premium over the prevailing market price.

This development follows HH Capital’s earlier acquisition of 1,493,477,786 ordinary shares in Transcorp at an average price of ₦3.12 per share, a transaction that elevated the firm’s ownership stake to a level requiring compliance with the Investment and Securities Act of 2007 and SEC regulations. The law mandates that when a shareholder’s stake surpasses a specific threshold, they must make a tender offer to give minority shareholders a fair chance to exit their investments under equitable terms.

In a statement released recently by Atinuke Kolade, Transcorp’s Company Secretary, it was revealed that shareholders who choose to participate in the tender offer will receive a price slightly above the trading value of Transcorp shares at the time of the offer. This ensures that minority investors are not disadvantaged by HH Capital’s increased control.

The approval comes amid a period of strong financial performance for Transcorp. In its third-quarter financial results for 2024, the company reported a 352 percent year-on-year increase in profit before tax (PBT), totalling ₦34.5 billion for the quarter. This surge brought the nine-month PBT to ₦105.4 billion, reflecting a 303 percent increase compared to the same period in 2023 and surpassing the full-year 2023 pre-tax profit by 79 percent. Revenue figures also demonstrated significant growth, with Q3 2024 revenue rising by 166 percent to ₦122.3 billion, while the nine-month total reached ₦297.7 billion, representing a 133 percent year-on-year increase.

Transcorp’s revenue streams were notably driven by its energy segment, which contributed 57.6 percent of earnings, while capacity charges and room sales accounted for 26.1 percent and 10.7 percent, respectively. On the Nigerian Stock Exchange, Transcorp shares have seen remarkable growth, with a year-to-date surge of over 400 percent, rising from ₦8.66 to ₦44.00. However, following a 1-for-4 share reconstruction, the adjusted appreciation stands at 27%.

The backstory to this transaction traces back to April 2023, when HH Capital acquired its significant stake in Transcorp, bringing its ownership, along with related parties such as Mr. Tony O. Elumelu and Dr. (Mrs.) Awele Vivien Elumelu, to 35.94 percent. Regulatory obligations—not strategic imperatives—necessitated the tender offer, reflecting standard capital market practices designed to protect shareholder interests and uphold transparency.

This approval highlighs the SEC’s commitment to enforcing governance protocols and protecting investor rights. For minority shareholders, the tender offer presents an opportunity to liquidate their holdings at favourable terms. For HH Capital and Transcorp, it marks another step in consolidating shareholder structure and aligning corporate strategy with regulatory requirements.

As the tender offer process begins, industry stakeholders will be watching closely to assess its impact on shareholder sentiment, Transcorp’s stock performance, and the broader Nigerian capital market. The development not only reflects the evolving dynamics of corporate ownership in Nigeria but also highlights the increasing emphasis on regulatory compliance and investor protection in significant equity transactions.