ICD purchases minority stake in Dangote Cement

by Tunji Andrews

Investment Corporation of Dubai (ICD), the main investment arm of the Emirate of Dubai, last week agreed to purchase a minority interest in Nigeria’s largest cement manufacturer, Dangote Cement plc, from majority shareholder, Dangote Industries Limited.

The deal saw a total of 243,540,000 units of DANGOTE CEMENT PLC [DANGCEM] at N200 per share, valued at N48.708 billion traded as an Off-Market trade. This remarkable trade between the seller, Dangote Industries Limited and the buyer, Investment Corporation of Dubai was executed by Meristem Securities Limited anf represents the largest single trade on The Nigerian Stock Exchange since 1997.

Dangote Cement, which is listed on the Nigeria Stock Exchange, forms part of the Dangote Group, a diversified conglomerate of African businesses, founded and controlled by internationally renowned Nigerian business leader Aliko Dangote.

Under the terms of the agreement, which was signed at a ceremony in Dubai attended by HE Mohammed Ibrahim Al Shaibani, Executive Director and CEO of the Investment of Corporation of Dubai and Aliko Dangote, President and CE of Dangote Industries Limited, ICD agreed to invest $300m to acquire a minority interest.

Dangote Cement, which has in recent years achieved significant revenue growth and industry-leading margins, has market capitalization of approximately $23bn. This places the Company, in value terms, above industry heavyweights such as Anhui, CRH and Heidelberg, and leaves it second in value only to the recently merged Lafarge/Holcim.

The company has ambitious expansion plans to grow its capacity from the current levels of c.35 MTA to more than 60 MTA by 2018, both domestically and across the continent, in order to capitalize on long term structural economic growth.

Domestically this will allow the Company to maintain and grow its market leading position (currently 62%) in Africa’s largest economy (Nigerian GDP is expected to grow by 6.6%-7.3% per year between 2014-2018*).

The transaction represents a landmark for ICD being its first major investment in the high growth African continent and is aligned with one of its key strategic goals to pursue diversification.

Commenting on the deal, HE Mohammed Ibrahim Al Shaibani, stated:

“We believe Sub-Saharan Africa, and particularly Nigeria, provides fantastic long term investment opportunities. In this case, Dangote Cement provides some excellent investment credentials, being a highly profitable, well capitalized and efficiently run organization, with a market leading position in the largest African economy and very well positioned to access and act on growth opportunities across the continent. Consequently, we are very pleased to be given the opportunity to invest and participate in its future growth potential.”

The deal serves to further bolster the Company’s register with large, institutional investors, consistent with previous minority share sales, and demonstrates the increasing appetite for international capital in high quality African assets such as Dangote Cement.

Commenting on the transaction, Aliko Dangote, Chairman of Dangote Cement PLC, said:

“We are pleased to welcome such a prestigious investor as the Investment Corporation of Dubai to our growing list of international, blue-chip shareholders. They share our vision of Africa that will grow to become an economic powerhouse in the coming decades as its people rise to become prosperous members of the global economy.”

“Our products may be simple bags of cement but millions of Africans will use them to build a continent that is rich in opportunities for entrepreneurs and investors, like ICD, who support them.”

ICD’s investment complements the already strong business and commercial ties between Dubai and both Nigeria and Sub-Saharan Africa. This interest is further reflected in ICD being the forum title partner of the 2nd Africa Global Business Forum, taking place on October 1st and 2nd in Atlantis, The Palm Dubai. The 2 day forum, which is organised by Dubai Chamber under the patronage of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, will serve as an ideal platform exploring new business partnerships and opportunities between Africa and Dubai and the rest of the world.

Culled from www.ynaija.com