Friday, December 03, 2021 / 05:46 PM / byOdu'a Investment Company Ltd / Header ImageCredit: Odu'a Investment Company Ltd

Mr. Adewale Raji (AR) is the 8^th GroupManaging Director/CEO of Odu'a Investment Company Limited. He was firstappointed into the position for a term of five years on the 1^st of June 2014 and later got his appointmentrenewed for a second tenure in June 2019 following performance evaluation byTop Tier (Big-4) Advisory Services and ratification by Shareholders.

An Entrepreneurial and Strategy driven Leader/ Chief Executive, withover three (3) decades of leading industry expertise. Accomplished professionalwith multinational experience in FMCG end-to-end Supply Chain, with proficiencyin Materials Management, Planning, Procurement, Logistics & Distributionand Route-to-Market Channel Development & Deployment.

Mr. Raji has a Track record of exceeding set targets, growing bottomline while spearheading operational improvements to drive businessprofitability and costs optimization. He is highly successful in implementingbusiness process improvements, change management, developing people andcommercializing all aspects of a business, excelled in dynamic & demandingenvironments while remaining pragmatic and focused on value, people andresults.

Recently,Odua Investment Company Limited celebrated her 45^th anniversary, andhe gave us an insight into the organization and how it aims to continually bethe economic powerhouse of the South-Western region of Nigeria. Excerpts-

Q: Congratulations, Sir, on the 45^thanniversary of the Odua Investment Company Limited (OICL), earlier in the yearduring the annual general meeting, the conglomerate revealed that it had wonthe Bita Oil and Gas marginal field. Have you paid your signature bonus for thefield and also, have you secured enough investment to develop the field so far?

AR: The Bita marginal field was awarded to us andanother partner by the Department of Petroleum Resources. We have 48.76 percentand the other partner has 51.24 percent. The entire bid amounts have been paidrelating to us and we have also paid the signature bonus. The asset as itstands now; we and our partner have jointly incorporated a new Special PurposeVehicle, called Bita Exploration and Production Limited. It is this field weare now using to discuss with Chevron which through what is called a farm-inagreement, will hand over that asset to us. There are indications at this pointthat we may not need much investment, just about $20m to go for the first oil.But the estimate that we have is that the total investment might requirebetween $120m to $150m. Our strategy, having paid up the signature bonus isthat we will sit down and listen to people who offer financial and technicalparticipation on the basis that they can also take equity in the whole project.

Sothat is our strategy, where those who have the technical capability and thefinancial muscle will come in and will negotiate. They take equity; bring inthe funds and the technical know-how to be able to produce oil from the field.Much of the funding is going to come from equity participation. As it is now,we and our partners are joint 100 percent owners.

Q: The company has revealed thenumerous sectors it is expanding its investment activities into. There isinsurance, oil and gas, real estate, hospitality, there are talks of fintechamong others. These businesses are technical businesses that also take time toyield returns up to the capital invested. A key strategy listed is throughjoint ventures. Are you not spreading yourselves too thin and will you haveenough oversight to be able to determine the results generated in thesebusinesses?

AR: Calling us a conglomerate is because we are playingin multiple sectors but from the strategy we have unveiled, Sweat Revive Create(SRC 2025), you will see that we have tried to limit ourselves to eightsectors, and you will see that we are already playing in some of them. Some arenew like e-commerce, logistics etc. They are new in the sense that we know theyare relevant for the present and the future, and we must look for means toparticipate in them, other than the sectors that we have traditionally been.Agriculture is one sector that we have been in, but we need to go deeper. Weshould not just be quoting the money we made from agriculture, we should alsobe quoting the jobs that we have created, the raw materials we are providingfor industries, and we should be talking about the internally generated revenuethat comes from that business.

Thewhole idea about using strategic partnerships is that it allows you to have alarger footprint and also means that for us, we are gaining specific expertisein those areas. In other areas, we talk about “revive.” Until the Nigerian Wireand Cable Limited in Ibadan went down, at the beginning we were 60 percentshareholders, but it failed because of governance issues and others. The truthtoday is that there is still a very high demand for cables in Nigeria today. Sounder the revive strategy, if we get the right partner with technicalcapability, we will want to enter into cable again. But we must enter on thebasis that we have a partner that is already attested nationally or globally tobe a leader in that sector, and that is what will lead to leverage because weknow the market is there. We know our shortcomings in terms of being operatorsof the business, because of that we have to make sure that in entering apartnership, we have taken care of the technical management and the financing.We will build capability in terms of the investment framework and theinvestment guidelines. That is the reason why we decided in the grouphead-office to move into a lean non-operating business. Our main expertise willbe in the core areas of investment.

Ourcapability will not be built in operations but in relationship management,alliance formation, partnership creation, and joint ventures setup. We willmake sure we have top-notch people who can do project appraisals, and make surethat requirements in terms of return on investment, internal run rate, returnon assets are all top notch and you are doing benchmark comparison in theindustry. Because your benchmarks are what make the business. In addition, weneed to also make sure we can galvanise the funds as this business requireslong-term, medium-term patient capital. We should be able to use our balancesheet which is over N150bn to leverage money to do investments. As an expertonce told us, why don't you own one percent of MTN? One percent of N3tn isN30bn, so if you have that, you can own one percent of MTN. If you generatelong-term patient capital, then you are capable of taking advantage of thoseopportunities. And frankly, the companies that thrive in Odu'a, were found onthis basis like in Lafarge, and what we had in Guinness before we sold off. Itwas such that our forbearers not only used Ikeja Industrial Estate as land thatthey gave Guinness to operate, they also added money to take equity. I haveseen a record of 40 million units of Guinness shares, and today we have zero.Those are the things that we need to build afresh.

Q: The Sweat, Revive and Create 2025plan of the board says the board anticipates that the business will expandrevenue by more than 500 percent in five years. That's a Compound annual growthrate of about 45 per cent annually. That's quite ambitious for joint ventureprojects. How do you want to achieve that with this wide portfolio? Are yougoing to be taking on leverage, and what are the risk management mechanisms ifyou are going to be growing that fast?

AR: There are very tough risk mechanism methods and riskappraisals that have been put in place and it continues to evolve. Quiteclearly, we want to be sure it is not just making money, but its money that isactually impacting the people. Governance is very strong as there are twoindependent non-executive directors on the board, who are not nominees of anyshareholder, and we are allowing them to play their roles. Besides,accomplished professionals are the ones that our shareholders also nominated.All these have been put in place and we are stretching ourselves by making surethat the different entities we have chosen as consultants are top-notch globalfirms. Recently, we appointed PwC Nigeria as our external auditor, KPMG Nigeriais handling our strategy and tax. We have also Deloitte handling the governanceside like whistleblowing, conflict of interest. So we are holding ourselves tothe highest standards of building things and the reason is not far-fetched, itis just the beginning. We have to achieve it which is tough, and we also haveto sustain it which is even tougher. But we have to lay the foundation of bothat the same time and make sure that it is completely irreversible and make surethat with governance, it has to be stronger.

Q: Is there a plan to raise funding inthe capital market in the future, and is the board eyeing a potential listingon the Nigerian Exchange Limited, or will it be staying private for quite sometime?

AR: Remember we are a group and if we are owned by thesix state governments of the southwest, the likelihood that an investor will becomfortable to be a shareholder will be slim. He will believe it is an unequalinvestment. So the company we call Odu'a Investment is not likely going toshare ownership, but the entities within the company like the Lagos AirportHotel that will be 80 years by next year will in the future, be a globaldestination for conferencing, banqueting, entertainment and leisure. How isthat going to happen without the money and the expertise? So you find out thatthe hotel for us today and in our hospitality business as a whole, what we arelooking forward to is a situation where it is this area we will allow investorscome share ownership with us. It is at a prime location. Potentially, if youhave a proper partner, you can actually spring on half the size of this land upto a 250 to 300-bedroom single-block global hospitality destination.

Inaddition, you still have half of the land still available for otherdevelopment. That is the approach we intend to use. So in the future, a LagosAirport Hotel is not there, maybe it will become a Marriot Airport Hotel, aSheraton Airport Hotel, but in the process, with the partner bringing hisfunds, and we will make this asset available for development, then the benefityou then have is that at that point we do not mind if we are a 20 percent or 30percent shareholder, but the investor has the opportunity to come in and have amajority stake. So what we see in the future is that we have a Sheraton, 4Seasons Airport hotel, that is now owned by that partner and OICL where we havediluted ownership. When it moves from a N2bn/annum revenue hotel to a N10bnrevenue hotel. In that, if you're 25 percent, you will have N2.5bn accrue toyou compared to when you are 100 percent of a N2bn business. So that is thevision that we have and that's how we plan to sell stakes in our businesses.

Q: So those are the structures you areputting in place to make sure that if something like COVID-19 happens again, itwon't really have that much of an impact?

AR: Well, yes. What is fundamental is that when you dothings like that and you have investments across, yes you are balancing yourportfolio, even though the pandemic will still have the same impact that ithad. But if you see businesses that thrived during the pandemic, you willmarvel. We are privileged to be shareholders in Nigerite, I mean it wasunbelievable. Because courtesy of COVID-19, even the competition that wasimported, did not come into the country while the market was craving forsupply.

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