• Presco secures $100M from SIAT NV, capitalising on Nigeria's "market premium" where local palm oil prices far exceed international parity.

• Revenue surged 120% to €156.2 million in 9 months, proving that strong domestic pricing power effectively insulates returns against Naira devaluation.

• Controlled by Saro Africa, the firm eyes a potential $1bn expansion to bridge supply gaps caused by aging plantations and costly imports.

Edo State-based palm oil producer Presco Plc is set to receive a $100 million (€85.9 million) capital injection from its Belgian parent company, SIAT NV. While the operation appears to be a standard capacity expansion, market observers suggest the primary driver is the unique economic allure of Nigeria’s palm oil sector. The investment, part of a broader plan potentially reaching $1 billion, seems calculated to capitalise on a specific "market premium"—a phenomenon where domestic barriers to entry and foreign exchange scarcity grant local producers a significant pricing advantage over international competitors.

The logic behind this massive capital deployment is rooted in the structural disconnect between global crude palm oil (CPO) prices and the realities in Nigeria. With importers struggling to access dollars and facing steep logistics costs, domestic CPO prices have maintained a strong upward trajectory, trading at a premium to international parity.

This environment transforms local production into a high-margin stronghold. The recent shift in governance further reinforces the strategic decision: since March 2024, SIAT NV has been majority-owned (86.73%) by Saro Africa, a Nigerian holding company led by Rasheed Sarumi. By channelling funds through the Brussels-based entity back into Presco, the new Nigerian ownership effectively doubles down on a market where it controls the entire value chain, shielding operations from the volatility of external supply shocks.

Pricing Power Outperforms Currency Volatility

The validity of betting on Nigeria’s market premium is evident in Presco’s recent financial performance, which has shown remarkable resilience against macroeconomic headwinds. For the first nine months of 2025, the company reported revenue equivalent to €156.2 million, a surge from the €70.8 million recorded in the same period of 2024.

This growth of over 120% in Euro terms signals that the combination of aggressive volume growth and sustained high local prices has outpaced the naira's devaluation. With the domestic market accounting for 72% of its sales, Presco has proven that strong local pricing power can effectively neutralise currency risk for investors.

Looking ahead, the fundamentals suggest this market premium will persist, justifying the scale of the expansion. An update from Afrinvest West Africa projects a 38.8% growth in pre-tax profits for sector leaders in 2025, driven by a persistent supply gap. Half of Nigeria’s oil palms are over 25 years old, and rural insecurity continues to hamper smallholder output.

Additionally, with global biodiesel demand diverting Asian supply, the pressure on local stocks remains high. In a landscape where demand outstrips supply and imports remain constrained, the $100 million investment appears to be a strategic move to capture the long-term value of Nigeria’s "Red Gold."

Idriss Linge