On Thursday, the Governor of Anambra State, Prof. Chukwuma Soludo said that the investment of the Presidential candidate of the Labour Party, Peter Obi, on behalf of the State is worth next to nothing.
Soludo stated this during an interview with Channels TV’s Politics Today which was monitored by Investogist.
We believe Governor Soludo was referring to the investment Peter Obi made in Intafact Beverages Limited, discounting Investments the Governor made in Government Bonds.
Is the Investment Peter Obi made in Intafact Beverages Limited worth next to nothing?
In 2012, the Peter Obi led Administration in Anambra State invested ₦1.95 billion in Intafact Beverages Limited, for reportedly 10% stake in the company. Intafact Beverages Limited was a new brewery being built in Onitsha by SABMiller Breweries of South Africa.
SABMiller had invested US$100mn in the Onitsha brewery which was commissioned on 30 August 2012. The brewery produces four brands including Hero Lager, Budweiser, Castle Milk Stout, Grand Malt and Beta Malt.
Intafact Beverages was indirectly acquired by the world’s biggest brewer, Anheuser-Busch InBev (AB InBEv) when it’s parent company, SABMiller of South Africa was bought by AB InBev.
After the acquisition, AB InBev indirectly owned 75% of Intafact, 82.8% of Pabod Beverages and 72.2% of International Breweries Plc (which was listed on the Nigerian Exchange at the time).
In June 2017, it was reported that the Board of Directors of International Breweries Plc, Intafact Beverages Limited and Pabod Beverages Limited agreed to explore the merger of the three businesses, subject to required regulatory and shareholders’ approvals.
AB InBev would go on to consolidate and merge all its brewery operations in Nigeria under International Breweries Plc.
All Shareholders of Intafact Beverages Limited, including Anambra State Government received shares of International Breweries Plc for their respective investments. Since December 15, 2017, Intafact Beverages Limited had been a part of International Breweries Plc.
Anambra State Government received 406,321,264 ordinary shares of International Breweries Plc in exchange for its investment in Intafact Beverages Limited. This represents a 1.51% ownership in International Breweries Plc.
International Breweries Plc as at the time of this report has 26,862,068,550 outstanding shares and a market capitalisation of ₦107.44 billion.
As at the time the Governor of Anambra State made his comments on Channels TV’s Politics Today, the share price of International Breweries Plc on the Nigerian Exchange Limited was ₦4.00. This puts the investment of Anambra State in the brewery to be worth ₦1.62 billion, a 16.92% depreciation from the amount invested by the then Governor Peter Obi on behalf of Anambra State.
It has been 10 years since Governor Peter Obi invested ₦1.95 billion of Anambra State money in Intafact, and it is almost 5 years since Anambra State Government received shares of International Breweries Plc in exchange of her investment.
International Breweries has not paid any Dividend to its Shareholders since 2017; it barely made it back to profitability. However, it is worth noting that before the consolidation, International Breweries paid dividends of ₦0.32, ₦0.25, and ₦0.35 to Shareholders in 2014, 2015 and 2017 respectively.
Following the consolidation, the share price of International Breweries Plc shot up to as high as ₦54.84 in December 2017, putting the value of Anambra State’s investment at ₦22.28 billion.
So, is Governor Soludo right to dismiss this Investment?
We don’t believe it’s right to dismiss the investment for three major reasons.
1. International Breweries employs many residents of Anambra State directly, and many more indirectly. It’s suppliers and services providers are in Business, thanks to the brewery.
2. Anambra State Government earns tax revenue from the direct and indirect employees, from companies doing business with the International Breweries and from businesses being patronised by those working directly and indirectly with the brewery.
3. An investment in company stocks cannot be evaluated over the course of a short 10 years. International Breweries is still in business, and making profits, and it is inevitable that its share price will rise as the market and the economy in general recovers.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
