Forte Oil rose by 10 percent for a fifth straight day on Friday to a four-year high, valuing it at 11 times what it was in January, stockbrokers said.
On 644,792 units traded, it closed at 104.90 naira per share. The company has risen consecutively since Monday to achieve a more than 1,100 percent gain since the start of the year.
“Investors see Forte Oil as an entry into power,” one stockbroker said, although some dealers said this was not sufficient to explain the company’s rise.
Nigeria is in the process of the most dramatic overhaul of its moribund power sector yet, selling off large chunks of the dysfunctional state power firm to the private sector.
But most buyers are private individuals, offering no way in for stock market investors. Forte Oil is a notable exception, as is Transcorp, which also won a plant, although it is much more diversified as a company.
Amperion Power Distribution Company Limited, a subsidiary of Forte Oil and majority owned by business tycoon Femi Otedola, last month paid $132 million to acquire the 414 megawatt Geregu Power Plant under a government-led privatisation scheme.
But another dealer said: “there is no way power investments could be responsible for this. We don’t yet know what the returns will be from power.”
A company source said Forte Oil was diversifying its business into power investment and that it expected the investment to contribute a significant proportion to its group revenues next year.
Forte Oil said it plans to expand the capacity of its power plant to 600 megawatts in the medium term, raising expectations of improved earnings for the group.
[Reuters]