TransCorp’s Shares Nosedive as ‘Brokers Bank on Company

Tony Elumelu, chairman, Transcorp Plc got stockbroker’s nod for a job well done, in spite of apathy gripping long term investors of Transcorp plc over their inability to recoup their dwindling investment in the conglomerate in the past six years following its initial public offers (IPO) sold at N7.50 per share in 2006, Nigeria CommunicationsWeek can now report.

Elumelu took over the chairmanship of the Transcorp’s board after what seems a protracted boardroom wrangling due to the company’s inability to live to its initial blitz in the days of former President Olusegun Obasanjo.

President Obasanjo had put together what looks like who-is-who in Nigeria business climate to set up the Transnational Corporation of Nigeria PLC, ostensibly to put Nigerians in charge of the economy.

But all that seems to have fizzled out after it lost control of Nigeria Telecommunications Plc (Nitel), due to poor management.

Several of its top management staff were also arraigned by the Economic and Financial Crimes Commission (EFCC) for funds misappropriation.

These along with the harsh operating environment have conspired to limit the growth of the company and its share price has bottomed out at N0.50 on the daily official list (DLO).

Nigeria communicationsWeek investigations pointed to short selling of Transcorp shares on the floor of the exchange by inpatient investors.

These investors prematurely take out their profits- on- investments leading to the lowering of the share price on the exchange last week.

These speculative activities led to the firm’s inability to establish momentum of price appreciation on the market to 0.98k traded the previous week at a total of 19 Million shares exchanges in the second week of November, 2012.

Emeka Maduegbena, a leading stock broker said short selling is normal phenomenon in capital play across the world. He noted that Transcorp would bounce back.

John Olabisi, of trading for Mainstreet stock brokers noted that short selling is allowed. The market does not have anything against such activities.

But the board of directors of Transcorp reassures investors of good dividends in its upcoming annual general meeting (AGM).

The recent Transcorp foray into power and energy subsector of the Nigeria economy is an added incentive for shareholders who see it as a move in the direction.

It is believed the new investment is the right management move aimed at restoring investors’ confidence in company’s stocks.