Dangote Cement Plc and Lafarge Africa Plc are said to be looking up to investors to help raise capital that will enable the companies to take advantage of proposed infrastructural budgets in Sub-Saharan African countries, including Nigeria. This, they hope, will ensure growth in the sector and overall economic development.
Recall that the Nigerian Government had earlier this month passed a ₦9.12 trillion national budget for 2018. The country’s Ministry of Power, Works and Housing had received as much as ₦682,959,550,242 which is nearly a third of the budget. The money will go into the construction of roads, railroads, and ports, etc. This presents immense opportunities for the cement companies.
Meanwhile, Dangote had earlier this year hinted at plans to raise as much as $500 million through Eurobond sales, even as it also planned to raise ₦300 billion through a bond shelf programme in Nigeria.
All these are part of plans by the company “to refinance debt and boost expansion.”
The company has also proposed an Initial Public Offering in the London Stock Exchange, a move it hopes will come to fruition in the next two years. People with information about the situation have disclosed that the company could raise as much as $1 billion through the London IPO.
Dangote Group, which currently has a presence in more than ten African countries, is investing heavily in newer markets such as the Democratic Republic of Congo and Tanzania. In its home country Nigeria, ongoing projects include export facilities that will facilitate shipments across the ECOWAS region. Raising investor capital will enable the company to complete these ongoing projects.
Meanwhile, Lafarge needs capital also…
Lafarge Africa is also hoping to raise as much as ₦100 billion “through equity or debt on top of a rights issue of about ₦130 billion late last year.”
The company recently acquired a plant in the southern Nigerian city of Calabar which has the capacity to produce about 5 million metric tonnes of cement per annum. Much like Dangote Cement, the company has investments in South Africa, even as it hopes to increase its production capacity to 17.5 million tonnes; up from 14 million tonnes.
Unfortunately for Lafarge, raising capital may not immediately translate to profits. Its global Chief Executive Officer, Jan Jenisch, had stated earlier this month that it will be difficult for it to turn around their operations in Africa and the Middle East.
In the meantime, economic improvements in Nigeria present growth opportunities for the company. Demand for the company’s product is also expected to rise in South Africa.