October 26, 2010
Nigerian industrialist Aliko Dangote completed the $14 billion listing of his cement business on Tuesday, lifting the capitalization of sub-Saharan Africa's number two stock market by a third.
Dangote Cement listed 15.5 billion shares at 135 naira after a merger this month with local rival Benue Cement, making it the country's leading cement maker and the biggest company ever to list on the Nigerian stock exchange.
Dangote, a tycoon ranked by Forbes as Nigeria's richest man, said he wanted "to create an African champion that can compete with the largest cement companies in the world".
The billionaire held majority stakes in Benue Cement and Dangote Cement through his holding company Dangote Industries, meaning the free float of the listed entity was initially just 4.1 percent, below the regulator's 25 percent minimum.
He sold $154 million worth of shares to bring the free float to 5.2 percent.
Dangote Cement executives have said the firm plans to sell a further 20 percent -- worth $2.8 billion based on the listing price -- in a global offer over the next 18 months, probably in London.
Listing broker Afrinvest said 25 percent of the shares were theoretically on offer in Nigeria, but the local market, whose capitalisation was just over 6 trillion naira before the listing, was unlikely to have the capacity to buy that amount.
"Because the market is not likely to absorb all of that quantity, the (stock exchange) council has given a special dispensation to sell the remainder over the next two years," Afrinvest Chief Executive Godwin Obaseki said.
The shares were Nigeria's most heavily traded on Tuesday, despite listing less than half an hour before the market closed. They ended flat at 135 naira and accounted for some 40 percent of total volume, with more than 196 million traded.
Dangote is Nigeria's leading industrialists, with business interests including listed flour and sugar companies.
He is setting up cement plants and import terminals around Africa including in Ethiopia, Ghana, Ivory Coast, Senegal and Zambia, and aims to produce 46 million tonnes of cement a year on the continent by 2015, 30 million of it in Nigeria.
Dangote told reporters he planned to transfer all his cement assets outside Nigeria -- currently owned by Dangote Industries – into Dangote Cement by the first quarter of next year.
The aim of the merger with Benue was to allow Dangote's cement operations better access to financing, as well as consolidating supply and distribution chains, reducing costs and helping increase cement production more quickly.
"The listing appears to have attracted significant interest from many investors. This, in addition to its low free float, should serve as a catalyst for the stock in the short term," Stanbic IBTC, said, setting a 12-month target price of 170.50 naira and a "buy" recommendation.
The brokerage said the company was attractively valued at 7.9 times 2012 earnings, compared with a ratio of 9 for Nigerian peers, though other analysts disagreed, saying the valuation was expensive compared with global peers such as France's Lafarge, the world's largest cement maker.