Odu’a Group’s transition to world-class conglomerate

By Sulaimon Olanrewaju

When Odu’a Investment Company Limited (OICL) was established in 1976, the mission was simple — to become the engine room of Southwest Nigeria’s economic development. Over the years, it played the role to the envy of many, albeit with not-so-great results. But the results were good. The group’s various units trickled in profits and the OICL kept going.

However, a few years back, the group engaged the services of KPMG which ran a health check on its investment portfolios with a focus on its business model covering industry, strategy, products and services, strategic alliances and customers. The other focus was on the operating model — corporate governance, organisation structure, people, core operations, and technology — as well as financial performance.

The check revealed that there were great potentials for the group to just be the engine room of western Nigeria’s economic development but an active player in the major sectors of Nigeria’s economy and ultimately a conglomerate of global repute. All it needed to do this was just within reach: a decision to start a journey. And the journey started.

To achieve great results, a lot of rejigging had to take place. So, the vision became clearer: to be the leading Nigerian conglomerate in chosen sectors, delivering above par performance in growth and profitability. And the mission, too: to deliver maximum returns to stakeholders through qualitative and strategic management, towards enhancing the heritage of the founding fathers.

Both would be anchored on the core values of integrity, excellence, creativity, passion and teamwork.

To drive the new vision, strategic pillars were set: grow the Group’s revenues to N20 billion, achieve PBT margins of 15 per cent, transition OICL into a lean Operating Holding Company, strengthen OICL’s oversight function in investee companies, sweat the Group’s portfolio of assets to achieve 12 per cent ROA, build a highly motivated workforce to deliver on the company’s goals and objectives all in a few years from then.

A new business-driven board

With the above in place, growth started but much more was needed, especially in corporate governance, to drive the kind of growth and vision that would place the group on a pedestal to compete favourably at the global stage.

So, when South West governors decided to strengthen the board and governance structure and consequently take a back seat last year, it was like a breath of fresh air.

A new board made up of astute and accomplished professionals with zero tolerance for parochialism was inaugurated.

Then the mission became further refined and streamlined to be in tune with 21st-century realities and in line with its renewed strategic direction and aspiration to Sweat, Revive and Create (SRC 2025: to achieve N40 billion revenue by 2025). Value for its stakeholders was also refined: To deliver sustainable returns for all stakeholders; enhancing the legacy for future generations. And the vision became clearer: to be a world-class conglomerate.

Since then, results have shown how having the right persons on the board could drive a company’s growth.

Growing annual returns

In July this year, OICL held its 39th Annual General Meeting at Cocoa House, Ibadan where it announced another leap forward. The group announced a profit-after-tax of N5.203 billion for the 2020 fiscal year despite the debilitating impacts of the COVID-19 pandemic which shrunk the economy.

The figure was an impressive increase of 11.5 per cent of the N4.665 billion profit recorded in 2019. If the profits before tax of 2018 (N849.34 million), 2017 (N698 million) and 2016 (N788 million) are anything to go by, then even the strictest of critics would agree that the 2020 figure was a huge leap.

At the meeting, the board approved a dividend of N364 million to its shareholders, which was an increase of 14 per cent over the previous year’s.

The Chairman, Board of Directors of the company, Dr Segun Aina, while addressing shareholders at the virtual AGM, reiterated that the board would continue to focus on the audacious five-year growth plan (2021-2025).

“This strategy of Sweat, Revive and Create (SRC-2025) is pinned on the strategic pillar of good governance and reporting; people and culture transformation; investment excellence, growth and expansion, and profitability and efficiency to sweat the existing assets, revive inactive entities and create new businesses,” he said.

For the Group Managing Director, Mr Adewale Raji, the strengthened position of the company helped it withstand the headwinds of the COVID-19 pandemic it experienced in its hospitality and real estate segments, noting that the revenue generated was a huge leap up by 112 per cent from N1.809 billion in the financial year 2019 to N3.842 billion in 2020.

“The PBT increased dramatically to N3.75 billion from N890 million in 2019. A sizable chunk of this PBT is a N2.63 billion gained from investment in properties revaluation which it stripped to put the net PBT at N1.12 billion that represents a 26 per cent over the 2019 performance of N890 million,” he said.

Revitalising existing businesses and expanding into new frontiers

To drive the 2025 target of the company, the creation of new profitable units is necessary, the GMD told Nigerian Tribune in an exclusive interview early this year. Creating new units takes the place of C in the SRC acronym and the company is wasting no time in taking the bold step.

At an interactive webinar session with business leaders focusing on emerging business opportunities within the Odu’a Group and the driver for partnership and business alliances, Dr Aina disclosed that the conglomerate’s board had created new strategic business units, and entered into joint ventures and alliances.

According to him, apart from the board having completed a corporate restructuring of the company with the initiation of strategies to grow its revenue and assets, the company planned new key investment opportunities which span the technology, financial services, healthcare, oil and gas sectors.

“We won the Bita Oil & Gas marginal field, and are finalising partnerships with investors for Capex. We have set up the Southwest Agricultural Company to focus on agriculture and the South-West Innovation & Tech Company Incorporated for fin-tech,” he said.

Dr Aina added, “We also have made hospitality partnerships in the Lagos Airport Hotel & Western Hotels, Real Estate Asset Leveraging (Wemabod & OICL), and created a facility management company as Wemabod Subsidiary. We plan to dilute equity in existing subsidiaries of the company.”

A Senior Partner at KPMG, Chief Joseph Tegbe, in a presentation titled ‘Setting the tone for OICL’, told participants that the consulting firm carried out a strategic health check which revealed some issues that warranted redefining the company’s aspirations.

Chief Tegbe stressed that the governors of the South-Western states, as shareholders in Odu’a Investment, decided to strengthen the company’s board and governance structure, saying “the Sweat, Revive and Create was then crafted to galvanise the group for transformation and taking advantage of the opportunities within the Nigerian economic landscape.”

The Governor of Lagos State, Mr Babajide Sanwo-Olu, represented by his Special Adviser on Sustainable Development Goals and Investments, Mrs Solape Hammond, expressed his satisfaction with the structural repositioning of the company.

Preserving old legacies in forward-looking ways

One of the core values of the group is to preserve the legacies of the founding fathers. The new board understands this and holds it dearly to heart, Mr Raji said. But, to stay relevant in the 21st-century market, he said the company is doing that in forward-looking ways that incorporate technology and diving deep into e-commerce and fintech and areas that attract the 21st-century consumer.

The youth, he said, are the future. This means to play in that future, the products and services of any relevance-seeking company must capture the unique nuances and needs of the youth. This, the group understands clearly and has incorporated in its expansion strategies.

“Unlike the past which is like preserving the legacy of our founding fathers, in which case we are always looking back to our founding fathers. They’re great. They’ve done it but now they’re no longer there, what is the future going to be? So, it means that the current generation should leverage that to create a future where future generations will have identification with Odu’a.

“So you’ll find out that along with that line it is imperative that the business needs to enter into segments where the younger generations are interested. I mean we are doing real estate now, we’re doing hospitality and what have you. What are the areas of interest to young people? You find out that fin-tech, e-commerce, innovation and technology are things that interest the young people.”

Pharmaceuticals is another area the company thinks is forward-looking and quite lucrative. Mr Raji said the company is taking the bold step of launching into it.

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