Investment Corporation of Dubai (ICD), the main investment arm of the Emirate of Dubai, has acquired 243.5 million units of Dangote Cement Plc shares sold by Dangote Industries Limited for $300 million (about N48 billion).
This is as Middle Eastern countries such as The United Arab Emirates (UAE) and Qatar are fast becoming a catalyst for trade and growth in Nigeria, as the cash flushed Gulf States deploy their finances in a bid to expand investment opportunities.
Africa is fast emerging as the next frontier and its status as the most promising market of the new millennium has attracted Arab countries; working diligently to stake a claim in the newer markets within the African continent.
ICD’s investment in Dangote Cement marks its debut investment in Sub-Saharan Africa and comes a week after Qatar National Bank (QNB), the Gulf’s largest bank, purchased a 12.5 percent stake in Pan-African lender Ecobank, making QNB the second-largest shareholder in Ecobank, after South Africa’s state-owned Public Investment Corporation.
The sale and purchase of the shares were executed by Meristem Securities Limited, a dealing member of the Nigerian Stock Exchange (NSE) while Guaranty Trust Bank Plc acted as the banker.
Dangote Cement, which is listed on the NSE, 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 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 $300 million (about N48 billion) to acquire a minority interest.
Dangote Cement, which has in recent years achieved significant revenue growth and industry-leading margins, has market capitalisation of approximately $23 billion. 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 about 35 metric tons per annum (MTA) to more than 60 MTA by 2018, both domestically and across the continent, in order to capitalise on long term structural economic growth.
Domestically, this will allow the company to maintain and grow its market leading position (currently 62 percent) in Africa’s largest economy (Nigerian GDP is expected to grow by 6.6 percent -7.3 percent per year between 2014 and 2018.)
The non-domestic expansion of about 19 MTA across 12 other countries, leverages the company’s industry and operational expertise whilst also targeting clear market inefficiencies. The plan is already taking shape in the commissioning of plants in South Africa earlier in the year, with plans to commission plants in Senegal, Zambia, Cameroon and Sierra Leone before the end of the year.
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 capitalised and efficiently run organisation, 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 supports them.”
ICD’s investment complements the already strong business and commercial ties between Dubai and 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 1 and 2 in Atlantis, The Palm Dubai.
The 2-day forum, which is organised by Dubai Chamber under the patronage of 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.
ICD was established in May 2006 under a mandate to consolidate and manage the government of Dubai’s portfolio of commercial companies and investments; and provide strategic oversight to the portfolio. By way of developing and implementing investment strategy and corporate governance policies with an objective to maximise stakeholder value, for the long-term benefit of the Emirate.
ICD, as the investment arm of the government of Dubai currently has a portfolio that represents a cross-section of Dubai’s most recognised companies, in sectors that the government of Dubai has deemed to be strategic for the continued development of the Emirate. The sectors include financial services, transportation, energy and industrial, real estate and leisure, retail and other holdings.
IHEANYI NWACHUKWU