Visionaries - February 17, 2022

Business Lessons from Femi Otedola’s Power Moves to Retain Control of First Bank

Wale Ameen February 17, 2022

15 min read

Billionaire businessman and chairman of Geregu Power plant, Femi Otedola is not a man of many words but actions. And his exploits in the business world attest to this.

He has shown times without number that he knows just what he wants and how to go after the same. From his time as chairman of Forte Oil to divestment moves to play big in the energy sector with his investment in Geregu Power Plant and very recently his bid to stand out as the largest shareholder in Nigeria’s premier bank, First Bank of Nigeria Plc, Femi Otedola shows he knows how to play the business game to win.

Otedola’s Foray Into Business

Born to former Lagos state governor Michael Otedola, Otedola’s foray into the business world has been a long stretch of conquered territories, business revitalization, and turnarounds to profitability. From oil, to shipping, properties, and finance, Otedola has his footprints in them all with viable businesses that bear testament to his Midas touch.

He is the chief executive officer of SeaForce Shipping Company Ltd, one of the largest ship owners in Nigeria, and CentreForce Ltd, a company that specialises in finance, investments, and trading. He is also the owner of Swift Insurance and is one of the largest shareholders in several banks including Zenith Bank and UBA.

The Struggle To Control First Bank

First Bank’s current tussle began in April 2021 when, a day after the Bank’s Annual General Meeting of FBN Holdings Limited, the board led by Ibukun Awosika announced the sack of Dr. Adesola Adeduntan as the Bank’s Managing Director and subsequently installed his deputy, Gbenga Shobo as it’s new MD.

The move drew the ire of the CBN Governor, Godwin Emefiele since the apex bank was not informed about the move before it was carried out. It was also seen by the apex bank as a ploy to wriggle its way out of an earlier directive it had issued just a day before the AGM.

The directive had to do with the insider lending going on in which Honeywell Flour Mills owned by FBN Holdings chairman, Oba Otudeko had been advanced a N75bn loan which the apex bank felt didn’t align with good corporate governance.

The Central Bank in the directive subsequently instructed that ‘’Honeywell fully repays its obligations to the bank within 48 hours failing which the CBN will take appropriate regulatory measures against the insider borrower and the bank.’’

Since Dr. Adesola Adeduntan belonged to a different shareholding camp from the Oba Otudeko’s camp and was more disposed to carrying out the apex bank’s directive to the letter, the board felt the best way was to ‘smartly’ remove him even though he was not due to retire until December 2021.

The Central Bank however would have none of it and in a rather surprising move to industry watchers, reinstated the embattled Managing Director and went ahead to announce the dissolution of the board of the holding company headed by Ibukun Awosika and Oba Otudeko.

Arising from this development, it seemed the battle to control the soul of Nigeria’s oldest bank had just been stirred once again.

By October, Mr. Femi Otedola’s purchase of 1,818,551,625 units of shares of First Bank Holdings Plc (FBNH), amounting to 5.07 percent of its total issued capital again brought to the fore renewed struggle between the largest shareholders of the company.

With the purchase, Femi Otedola joined the trio of Oba Otudeko, Chief Mike Adenuga, and the current Chairman of FBNH, Mr. Tunde Hassan-Odukale in the race for the control of the holding co.

Shortly after this, news filtered out that unknown to many, a group led by Mr. Tunde Hassan-Odukale, had acquired a 5% stake in the Bank using a number of vehicles.

A letter addressed to the Registrar General, from Asabia House, FBN Holdings Head Office, on October 18 read thus:

“In line with the provisions of Section 119 (1) of the Companies and Allied Matters Act (2020), the Company received a notification on Friday, October 15, 2021, from Leadway Assurance Company Limited, that Mr. Tunde Hassan-Odukale (Chairman, First Bank of Nigeria Limited) and related parties had acquired a total of 1,923512099 units of shares from the Company’s issued share capital of 35,895,292,791”.

This assertion would later be rejected by the authorities as the Nigerian Stock Exchange rejected the claim that Leadway Pensure PFA’s 1.05% stake could be counted as owned by Hassan-Odukale. Leadway Pensure PFA itself subsequently clarified that its FBN Holdings’ shares belonged to the Retirement Savings Account holders and not Hassan-Odukale as earlier claimed. This thus brought Odukale’s shares to 4.31%

Apparently, in a move to clear the doubts and stand out as the undisputed largest shareholder, Otedola, went ahead to purchase an additional 2.5% additional equity. This effectively brought his total stake to 7.57%.

Consolidating His Position

Not done, Femi Otedola appeared to have made up his mind to go bullish.

He recently nominated the appointment of Mr Julius B. Omodayo-Owotuga, Deputy Chief Executive of Geregu Power Plc as a Non-Executive Director of the holding company, move watchers say shows he has his eyes set on the board of the company.

Otedola however says this is far from the truth.

According to him, he is simply an investor seizing the right opportunities:

“I am simply an investor who saw an opportunity in the financial institution and decided to take advantage of it through the investment I have made.

“My interest, contrary to speculations, is not to become chairman of the bank or its Holdco. Moreover, I am in semi-retirement,” he said in a statement.

Mr Julius Omodayo-Owotuga has been a long-time ally of his and was previously the Executive Director, Finance at Forte Oil Plc before he divested from the business.

Otedola’s Long History of Bullish Acquisition

The First Bank experience isn’t the first time Femi Otedola will be making power moves to consolidate his involvement in a business.

His petroleum products marketing and distribution company, Zenon Petroleum and Gas was a major oil marketing giant between 2003 when it was founded till 2007 when he decided to take it a notch higher. To do this, he acquired 28.7% equity in African Petroleum (formerly British Petroleum).

By December 2007, he went ahead to invest N40bn to acquire an additional 29.3% stake of the company in a bid to acquire a controlling stake. With the controlling stake, he subsequently became the chairman and chief executive of African Petroleum (which later became known as Forte Oil Plc) leading to a spike in the market capitalisation of the new company from N36bn to N217bn within the space of just six months.

His investment in Zenith Bank made him its second-largest shareholder and he is also the single largest shareholder at the United Bank for Africa (UBA) as well as several other banks in Nigeria.

Always a man with an eye for opportunity, he decided to move into the power sector in 2013 when the federal government announced plans to liberalise the sector.

He sold his 75% stake in Forte Oil in 2019 to acquire the 414MW-strong Geregu Power Plant for $132m by financing 57% of Amperion Limited, a subsidiary of Forte Oil.

Business Lessons For Entrepreneurs

Femi Otedola’s story shows that in business, you either go big or go home as there is no room for half measures. You must be ready to plunge into the deep sea wherever you see the opportunity and must be ready to do this on time else such may be taken away from you.

Otedola’s business commitments also show a personal conviction in the business decisions he makes and this informs his all-out dive into such. And from what we can see so far, whatever he touches indeed turns to gold.

As an entrepreneur, you must be ready to give your all to whatever you have committed yourself to in terms of resources and time. There are no half measures.

Another salient lesson to draw from Femi Otedola is the fact that life is a constantly evolving space and as such one must never stay put on a spot. Just because you run a thriving business in town doesn’t guarantee you’ll still be in top demand tomorrow.

You must stay abreast of developments around you to know when the dynamics are evolving and also evolve along with it else you will be left behind in the scheme of things.