Dangote Cement may sell 20% to London investors

By Gbenga Agbana with agency reports

Tuesday, 26 Oct 2010

Dangote Cement may sell 20 per cent of its cement business to London investors, its Chief Executive Officer, Alhaji Aliko Dangote, said on Monday.

“It’s still under consideration, but most likely we may be thinking about taking it to London,” Dangote told a news conference in Johannesburg.

Reuters quoted him as saying, “We are still speaking to our financial advisers, but we will let people know very soon.”

After months of speculations, the shares of Dangote Cement Plc will finally be listed by introduction on the floor of the Nigerian Stock Exchange today (Tuesday).

The company will offer 100 million of its shares to the market, in a special sales offer, at the rate of N135 per share.

Meanwhile, market commentators have all said the listing will deepen the depth of the NSE effectively, when all the 5.5 billion shares are listed.

The Managing Director, Afrinvest Limited, Mr. Ike Chioke, said that banking stocks used to account for a greater proportion of market capitalisation, but the listing of Dangote Cement would add about N2.13tn to market capitalisation, as the new company’s shares would diversify the market.

Chioke said that with the listing, foreign investors would then have the option of investing in Dangote Cement, which would be the largest quoted company measured by market capitalisation.

According to him, “Dangote Cement represents a new class in the Nigerian capital market. It will diversify the domestic capital market. The listing by introduction of the shares of Dangote Cement will expand the market from about $40m to $55m.

“The banking sector’s share in the market will shrink to about 30 per cent. Foreign investors coming in now will see a more diversified market.”

He projected a robust future for Dangote Cement, going by the expected 7.6 per cent growth projected for the Nigerian economy and government‘s investments in infrastructure like the ongoing power reforms, roads and rail network.

These developments, according to him, will significantly reduce the cost of living and the disposable income of the populace, who will therefore invest such in improving their living standards, including building or buying new homes.

A financial analyst, Mr. Nornah Awoh, said though, more than 75 per cent of the newly quoted issues could not meet their profit forecasts, with the antecedent and focus of the Dangote Group, he was sure, the forecasts would be met and surpassed.

Corroborating Awoh‘s view, a stockbroker, Mr. Tunji Awoyemi, said the market was expecting the company’s listing, noting that the demand would surpass whatever quantity the company would put on offer, adding that the stock promised to be the best in terms of returns on investment. He also expressed the hope that the new company’s shares would diversify the market portfolio.

The sales revenue projection for the new company showed a turnover of N225.9bn at the end of this year, out of which N118.8bn would be profit attributable to shareholders, with Dangote Cement contributing 76.2 per cent and 82.7 per cent respectively.

Source: Punch

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