The management of Dangote Group, one of Africa’s biggest and most diversified conglomerates, at the weekend confirmed plans to increase its shareholding in South Africa’s Sephaku Cement Limited from the present 19.8 per cent to 64 per cent.
Aliko Dangote, President and Chief Executive of Dangote Group, said the decision to increase its stake in Sephaku Cement, one of South Africa ’s leading cement manufacturing companies, is part of its Sub-Saharan expansion project.
The decision, according to a Dangote, arises from “South Africa being one of the fast-growing economies in Africa and displays strong growth in most economic indices. We need such international expansion to grow at a similar rate or outperform the BRIC nations of Brazil, Russia, India and China. Our aim is to achieve global operational excellence, enlarge our footprints through cross-border acquisitions, build a global brand and in five years, be number one cement company in Africa”.
Sephaku Holdings had earlier announced that the decision was reached by both parties, and that: “the board is pleased to announce that a heads of agreement has been signed with Dangote in relation to the funding of a Cement Project held by its 80.2 per cent- held subsidiary, Sephaku Cement.”
The Agreement further states, “In terms of the Dangote agreement and subject to, inter alia, shareholder approval and the approval of the JSE Limited and any other requisite regulatory bodies, Sephaku Cement will undertake an issue of additional shares to Dangote in order to raise R779 million. This will result in Dangote holding a 64 per cent interest in Sephaku Cement.” Sephaku Cement is also building a 2.2mtpa Greenfield Cement plant in South Africa.
“The implementation of the Dangote issue will provide the entire equity requirements for the Cement Project,” the company stressed in the agreement. Other terms in the agreement between the two companies include Dangote’s obligation to provide the necessary guarantees required for Sephaku Cement to secure the debt funding required for the Cement Project; to fund any overruns on the Cement Project with a loan on commercial terms up to an amount of R265 million; and to fund Sephaku Cement’s limestone exploration programme relating to its assets in the Western Cape and Limpopo Province with a loan on commercial terms up to an amount of R35 million.
As part of the group’s Pan-African expansion, Dangote Group has also invested in Ghana’s Tema Cement Factory which commenced operations early this year, with a capacity for 1.2 metric tons per annum. Similar projects are also coming up in Takoradi, Ghana; Senegal, Zambia, Tanzania and Ethiopia.