Group Managing Director of Odu’a Investment Company Limited, Mr. Adewale Raji, talks about the state of the real estate industry, the national investment landscape and other issues, in this interview with DAYO ADENUBI
Yesour the company would have won the marginal field of Bita Oil and Gas. Have you paid your signing bonus for the domain and how do you plan to raise funds to develop the domain?
The marginal Bita field was awarded to us and another partner by the Department of Petroleum Resources. We have 48.76% and the other partner 51.24%. The auction amount has been paid and we have also paid the signing bonus. As it stands, we and our partner have jointly incorporated a new special purpose vehicle called Bita Exploration and Production Limited. This is the ground that we are now using to discuss with Chevron who, through what is called an affermage agreement, will return this asset to us. They will provide us with all the data relating to that and the DPR has already written to this effect, so we are in contact with Chevron at this point. It is on this basis that we will talk about the field development plan. There are indications at this point that we may not need a lot of investment, just around $ 20 million for the first oil. But the estimate we have is that the total investment could require between $ 120 million and $ 150 million. Our strategy, after paying the signing bonus, is to sit down and listen to the people who will offer a financial and technical stake on the basis that they can also take stakes in the whole project. So this is our strategy, where those who have the technical ability and the financial muscle will come and negotiate with us. They take equity, bring in the funds and the technical know-how so that we can produce oil from the field. Much of the funding will come from equity participation. Currently, we and our partners are 100% co-owners. Maybe at the end of the day, because of the investment that’s going to come, there will be a dilution where at the end of the day we will share this area with those who bring the funds and the technical know-how. What is quite clear is that the asset is owned by two partners.
What does the Ikoyi building collapse foreshadow the real estate sector given that your company is a key player in this sector?
What I think this portends for Nigeria is that we need to take professionalism and regulation to the next level. It has to be at a level where, by deploying what we have called a big structure, we also have to be very accountable and transparent about it. What I mean is that the process of investigating, applying for and approving a permit has to open up to be much more transparent. It should be one thing that if I live in the neighborhood and see people hitting the ground and building something, I should be able to go online and have minimal knowledge of what they’re doing there. What this means is that the information is available to me because this process has been made transparent. I think that’s what we need. There are huge regulations in place there, but I think there is a level of opacity there. It means that even when you hear people who are in the area who know it, it’s like a camel trying to go through the eye of a needle. We need a higher level of transparency so that we can validate who is there. Knowing this, I think the charlatans will be easily eliminated. Because what it means is that with this opening, it will be such that if you are someone who takes shortcuts, right away with social networks, we will say âoh you are doing this development, how did you do it? you got the permit? We will even write petitions and objections, but transparency has to come into play. I know there are a lot of regulations going on, but most of them are not known to the public. We need to build that credibility so that people can feel confident that we have an opening where people can inquire and be satisfied. And we will be relieved of the ignorance, otherwise, it is the peddling of rumors that will continue, which is a big challenge.
Your company has also revealed its intention to expand into several industries, including insurance, oil and gas, real estate, and hospitality. How do you plan to ensure effective oversight in all of these areas?
Calling us a conglomerate, it’s because we play in several sectors, but according to the strategy that we unveiled, SRC 2025, you will see that we have tried to limit ourselves to eight sectors, and you will see that we are already playing in some of them. . Some are new; such as e-commerce, logistics, etc. They are new in the sense that we know they are relevant for the present and the future, and we need to look for ways to participate in them, outside the sectors we traditionally operate. Agriculture is a sector in which we play, but we must go further. We should not only cite the money we have earned from farming, we should also cite the jobs we have created, the raw materials we provide to industries, and we should talk about the internally generated income that comes from of this activity. The whole idea of ââusing strategic partnerships is that it allows you to have a bigger footprint. In addition, we acquire specific expertise in these areas. In other areas, we talk about a strategy to âreliveâ. At first we had a 60% stake in Nigerian Wire and Cable Limited in Ibadan, but it failed due to governance and other issues. The truth today is that there is still a very high demand for cables in Nigeria. So as part of the relaunch strategy, if we get the right partner with technical capacity, we will want to get into the cable again. However, we have to enter on the basis that we have a partner who is already attested at national or global level, to be a leader in this sector. We’re going to take advantage of that because we know the market is there. We know our shortcomings as company operators. We have to make sure that by entering into a partnership, we have taken over the technical management and the financing. We will build capacity in terms of investment framework and guidelines. This is the reason why we decided, at the headquarters of the group, to move towards a non-operational lean activity. Our main expertise will be in the key areas of investment. Our capacity will not be built in operations but in relationship management, forming alliances, building partnerships and setting up joint ventures. We will ensure that we have top notch people capable of evaluating projects and that the requirements in terms of ROI, internal execution rate, return on assets are all top notch and that you perform an industry benchmark comparison. We should be able to use our balance sheet which exceeds 150 billion naira to raise money for investment.
The board’s Sweat, Revive and Create 2025 plan says the board expects the company to grow revenues by more than 500% in five years. Are you not too ambitious?
Very strict methods and risk assessments have been put in place and will continue to evolve. The governance is very strong because there are two independent non-executive directors on the board, who are not appointed by any shareholder, and we allow them to play their role. In addition, accomplished professionals are those that our shareholders have also appointed. All of this has been put in place and we strive to ensure that the various entities that we have chosen as consultants are top-notch global firms. Recently we had to appoint PwC Nigeria as external auditors, KPMG Nigeria takes care of our strategy and tax. We also have Deloitte, which deals with governance, such as whistleblowing, conflicts of interest, etc. So we stick to the highest standards of building things and the reason is not far-fetched, this is just the beginning. We have to achieve it, which is difficult, and we also have to maintain it, which is even more difficult. But we have to lay the foundation for both at the same time and make it completely irreversible.
Is there a plan to raise funds in the capital market in the future, and is the board considering a potential listing on the Nigerian Exchange Limited?
I’ll be frank. Remember, we are a group and if we belong to the six Southwestern state governments, the likelihood of an investor feeling comfortable being a shareholder will be slim. He will think it is an unequal investment. So the company we called Odu’a Investment will probably not share ownership, but the entities within the company, like the Lagos Airport Hotel, which turns 80 next year, will be a destination in the future. world class for conferences, banquets, entertainment and leisure. How will it be without the money and the expertise? So this is an area where we will allow investors to share ownership with us. The land on which it is located is prime real estate. How many of them can you get here? But potentially, if you have a suitable partner, you can actually take advantage of half the size of that land up to a 250-300 bedroom global hotel destination. In addition, you still have half of the land still available for further development. This is the approach we intend to use. So in the future a Lagos airport hotel is not there, maybe it will become a Marriott airport hotel, Sheraton airport hotel, but in the process, with the partner bringing in their funds, and making that asset available to us for development, then the advantage you have then is that at this point we don’t mind if we’re a 20 or 30 percent shareholder , but the investor has the option of entering and having a controlling stake.
What structure do you have in place to ensure that unforeseen developments like the COVID-19 pandemic do not cause a major setback for the business?
What is fundamental is that when you do things like this and have investments through, you make sure to balance your portfolio, even though the pandemic will still have the same impact it had. But if you see any businesses that thrived during the pandemic, you’ll be in awe. We have the privilege of being shareholders of the Nigerien; the market was thirsty for supplies during the period.
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