Transcorp Hotels (Nigeria) intends to raise US$48.8m (N8bn) through an IPO, which commenced marketing on Sept. 25th and is expected to close on Oct. 17th.  The hotel company will offer 800 million ordinary shares to investors at 10 naira per share.

Transcorp Hotels is the hospitality subsidiary of Transcorp (Transnational Corporation of Nigeria Plc) and it plans to raise funds from the capital market to support development of two new hotels in Lagos and Port Harcourt.  Both hotels, already featured here will be managed by Hilton, who already manage the company’s Abuja property.  The company also plans to spend approximately US$57.5 million (N9.2 billion) on the renovation of the Transcorp Hilton Abuja, over the next three years.

Nigeria’s hotel and leisure industry has experienced growth in the recent years as global international hotel operators including Marriott, Grand Hyatt, The Luxury Collection and others keen on making an entrance. However, as the supply of hotel rooms grow, sustainability of high rates currently achieved may not be as certain. A report from Hotel Specialists HRG, which was released earlier this year showed that Lagos had the 5th highest Average Room Rate at £214.98 and sat with the likes of Paris, Zurich, Geneva and New York City. Moscow topped the list at £259.37.

Transcorp is a multi-disciplinary business with a stake in power, oil & gas and agriculture. They announced plans in July to expand their hotel business in Nigeria to tap into a growing market for business travellers. According to Reuters, the stock exchange said it had received Transcorp’s application for the share sale 2 weeks ago. Transcorp Hotels will have a stock market capitalisation of N79.8bn ($487.4m) on listing.

“Over the next five years, the company will take a phased approach in developing high-end hotels…as well as a convention center and apartment complex,” it said in its IPO document. Pretax profit at Transcorp Hotels rose to 6.12 billion naira in 2013, up 51 percent from a year earlier. It expects 2014 pretax profit to hit 7.45 billion naira.

The Nigerian IPO scene has been largely dormant since the financial crisis over 6 years ago. Markets have since recovered, gaining 35 percent in 2012 and 47 percent in 2013. This new offering, Seplat’s $500m dual IPO in April, and Heritage Bank’s anticipated IPO signify that there is a slow resurrection in this part of the market.