How power firms can tap into Nigeria’s capital market

Transcorp Power, a prominent player in the Nigerian power sector, has made its debut on the Nigerian Exchange, following in the footsteps of Geregu Power's successful listing in 2022. This move symbolizes a significant moment for the Nigerian capital market and highlights the potential for power firms to tap into the market for growth opportunities. Esther Otusanya, Senior Investment Research Analyst at Meristem Securities, provided valuable insights into the implications of Transcorp Power's listing and the outlook for the power sector in Nigeria. The listing of Transcorp Power on the Nigerian Exchange is seen as a positive development, considering recent trends of companies intending to delist. The entry of new listings, particularly from sectors like power that have been underrepresented, reflects well on the market and signals growth prospects for the industry. Despite challenges such as power cuts, liquidity issues, and regulatory concerns in Nigeria's power sector, the opportunities for growth and expansion remain substantial. Esther Otusanya emphasized the potential for power firms to explore opportunities across the value chain. From generating power to distribution, there are avenues for expansion and revenue generation. With only 60% of Nigeria's population currently having access to electricity, there is significant untapped market potential for power companies. However, inefficiencies in the collection of funds and operational challenges hinder the sector's full potential. Transcorp Power's profile showcases strong capabilities and growth prospects. The company's strategic location, direct access to gas supply, and efficient infrastructure position it favorably in the market. Transcorp Power's financial performance, with impressive revenue growth and high plant capacity utilization, indicates a promising future for investors. Despite challenges like gas supply constraints, the company's asset maximization strategy and operational efficiency initiatives are expected to mitigate risks and drive growth. The listing of 7.5 billion shares at 240 Naira each positions Transcorp Power as one of the most capitalised companies on the Nigerian Exchange, signaling investor confidence and market value. The success of Transcorp Power's listing is expected to encourage other power firms to consider entering the market, following the positive trajectory of Geregu Power's listing. Esther Otusanya highlighted the importance of Transcorp Group's success in listing its subsidiaries on the exchange, setting a benchmark for other major companies to follow suit. The listing of Transcorp Power not only enhances market liquidity but also sends a positive signal to investors about the value of Nigerian equities. Efforts to improve market liquidity and attract more listings are underway, with the potential for additional listings from entities in the US and the UK. Overall, the listing of Transcorp Power on the Nigerian Exchange reflects the growing opportunities in the power sector and the market's resilience. With a focus on operational efficiency, strategic growth initiatives, and investor confidence, Transcorp Power's debut signals a new era of growth and development for Nigeria's power industry.