Nigeria cement business set for $14b listing

Aliko-DangoteAliko Dangote, Africa’s richest man, plans to list the cement arm of his industrial empire on Nigeria’s stock exchange, in a $14bn share issue that will rank among the continent’s biggest.

The cement offering, which has been approved by regulators, will test investor sentiment in Nigeria, sub-Saharan Africa’s second biggest economy and its leading energy producer, whose bourse has yet to recover from its crash in 2008.

If successful, the listing would propel the Nigerian tycoon, whose fortune Forbes magazine conservatively estimated at $2.5bn last year, into the ranks of the world’s wealthiest people. It could also spur ambitions to expand the group that were put on hold during the global downturn.

“Aggressive growth plans target a strong pan-African presence as Dangote Cement evolves to become a truly multinational corporation,” said a statement from Dangote Group, which has interests from sugar and flour to oil and property.

Once cement joins the already listed flour and sugar operations, Dangote Group companies could amount to about one-third of the Nigerian stock exchange’s entire market capitalisation, which has fallen to about $40bn, less than half of its peak two years ago.

Three decades after he began with a single cement import licence, Mr Dangote has amassed wealth and top political connections. Nigerian analysts said the success of the latest offering would hinge on international investors looking for exposure to a country with vast untapped potential via a key commodity.

The plan for the listing will see the conglomerate’s cement arm merge first with listed Benue Cement, in which Dangote Cement owns a 75 per cent stake. Benue shareholders will be offered one share in the enlarged group for every two Benue shares held.

The new listed company, called Dangote Cement, plans to issue 15.5bn shares at N135 each, giving it a market capitalisation of N2,100bn ($14bn).

In Nigeria the Dangote Group plans to double operations from the continent’s biggest cement plant to 10m tonnes a year, with a further 5m from a new site.

Combined with Benue’s 3m tonnes, the new group will in coming years have production capacity of 18m tonnes a year in Nigeria alone, on top of import terminals which can handle 9m tonnes annually.

Planned expansion of existing operations in Zambia and Senegal will add to output in Benin, Ghana and South Africa. Benue has a market capitalisation of $1.7bn. Revenues last year were $230m. Dangote Cement’s were $1.3bn.

Cement consumption in Nigeria rose by 10 per cent to 14.8m tonnes last year, with bolstered government infrastructure spending likely to boost demand, according to analysts at Renaissance Capital. Nigerian per capita cement consumption last year was 98kg.

Anthony-Claret Onwutalobi
Anthony-Claret is a software Engineer, entrepreneur and the founder of Codewit INC and CEO of Portia Web Solutions. Mr. Claret publishes and manages the content on Codewit Word News website and associated websites. He's a writer, IT Expert, great administrator, technology enthusiast, social media lover and all around digital guy.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.