TheCable

Stock price of Forte Oil, owned by Femi Otedola, Nigerian billionaire, shed off 43.5% in value in the last nine weeks, costing the business magnate more than $400 million of his personal fortune, according to Forbes.

In late February, the share price of Forte Oil hit an all-time high of N342 per share after the Lagos-based utilities and petroleum marketing company released its impressive 2015 financial year results and declared an attractive dividend of N3.45 per share.

However, as at close of trading on Tuesday, its share price had dropped to N193.46 after recording consistent daily losses over the past few weeks.

Otedola, who is the company’s controlling shareholder, has seen his paper net worth drop from $1.6 billion when Forbes published its annual ranking of the World’s Billionaires in March, to $1.2 billion as at Tuesday, according to the Forbes’ real-time billionaire scorecard.

The magazine quoted a source at Forte Oil as linking the drop in the company’s share price with massive sell-offs of bonus shares from some of the company’s retail investors.

Last year, Forte Oil offered investors a bonus of one new share for every five ordinary shares they held.

In total, Forte Oil declared roughly 216 million bonus shares for the 2014 business year.

The bonus shares were only issued to investors a couple of weeks ago and they have been scrabbling to sell off their bonus shares on the market to cash in.

This mass sell-off has precipitated the drop in the share price.

“This is only temporary. As you’ll see, even though investors are selling off their bonus shares, there are institutional investors who are buying up all the shares on offer as evidenced by the volume of the transactions in the last few days,” the source said.

“When all those bonus shares are cleared up by institutional investors, you’ll see the share price rising again.”

Of the 216 million bonus shares, which have been issued, Otedola received approximately 170 million.

Forte Oil Plc is primarily engaged in the distribution of petroleum products such as diesel, aviation fuel and premium motor spirit (PMS).

The company has over 500 company-owned, dealer-assisted and dealer-developed gas stations spread across the country, oil storage depots in Lagos and Rivers states, a Power plant and a Joint User Hydrant Installation facility in Lagos.

The company also sells its own range of automobile lubricants. In 2014, it was included in the Morgan Stanley Capital International Frontier Market 100 Index.