Transcorp Hotels plc will begin the construction of its $140 million Lagos Hilton in two weeks, as it seeks to ride a wave of growth in Africa’s largest economy.
“We have signed the agreements for piling works to begin,” said Valentine Ozigbo, its CEO, in a recent interview with BusinessDay in Lagos.
“Expanding to Lagos is a dream that we have planned for a while. Our current growth assumptions are conservative and we see a growing demand for hotels, especially in the under-served Lagos market,” Ozigbo said.
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Transcorp Hotels accounts for about 40 percent to 45 percent of parent Transnational Corp. of Nigeria plc group revenues of N21.21 billion for the six months period ended June, 2014.
The company plans to invest the proceeds of the IPO into a series of five star, upper market and middle market properties, the first of which will be two new hotels in Lagos and Port Harcourt at a cost of $140 million and $100 million, respectively.
The firm plans to replicate its success in Abuja to other geographical locations in Nigeria with Lagos and Port Harcourt being the first two in that process, Ozigbo said.
The company’s recent N8billion initial public offering (IPO) was also done through a transparent process, with all relevant approvals gotten from the Securities and Exchange Commission (SEC), Ozigbo said.
Some shareholders had recently complained about the Transcorp Hotels IPO process, but an SEC Nigeria source recently told Businessday, that most of the allegations against the offer were baseless as Transcorp Hotels had satisfied all SEC requirements for the offer.
The status of Abuja as Nigeria’s political capital, where Transcorp has its flagship Hilton property and the lack of true 5 – Star quality hotels in Lagos will help mitigate the cyclicality of the business and recent strong competition, according to Ozigbo.
The Nigerian economy will expand at 7 percent this year, according to the World Bank in its 2014 Nigeria Economic Report.
Transcorp plans to build a 5000 capacity multipurpose convention and conference facility in Abuja, for which construction will commence soon.
“There is the need for Abuja to become a true conferencing centre in Africa,” Ozigbo said.
Nigeria is the most populous country in Africa with about 170 million people and the biggest oil and telecoms market.
PATRICK ATUANYA
