Dangote Cement plc, Africa’s leading cement manufacturer, is seeking to raise up to N100 billion in fresh funds from the bond market under its NGN300 billion Debt Issuance Programme.
According to the investor presentation document prepared by the company and themed ‘Building Prosperity in Africa’, the funds from the debut offering in the bond markets are to be utilised to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes.
The bond (medium-term debt paper) Dangote Cement is issuing for the first time signifies confidence in business growth and in the Nigerian economy’s long-term growth.
Dangote Cement plc is a good offer for discerning institutional investors and high net-worth individuals, analysts say. It is Nigeria’s largest company by market capitalisation on the Nigerian Stock Exchange (NSE), the largest cement manufacturer in sub-Saharan Africa with an installed capacity of 45.6Mta across its operations in 10 African countries, and operates a fully integrated “quarry-to-customer” business in seven of its operations with activities covering manufacturing, sales and distribution of cement.
The company, which is Premium Board-listed on the NSE, has a strong corporate governance framework supported by five independent directors while its shareholding base is diversified.
Dangote Cement posted an excellent financial performance in 2019 with EBITDA margins of 44.3 percent. It was rated ‘Strong financial profile including low leverage and significant operational scale’ (GCR AA+(Ng) (Jan 20) Moody’s Aa2.ng (Mar 20).
The company has a strong track record in the debt capital markets, having registered a NGN150 billion Commercial Paper programme in 2018, and issued an aggregate amount of NGN300 billion in Commercial Paper since programme establishment.
It also has a track record in Nigeria’s Debt Capital Markets as it raised an aggregate issuance of N100bn under the Commercial Paper Programme in 2018, and in 2019 raised an aggregate issuance of N200bn under the Commercial Paper Programme. These Commercial Papers were systematically oversubscribed.
Certain factors across Africa signal positive long-term trends for Dangote Cement. There is an increasing demand for cement as urbanisation continues across the continent, demanding more infrastructure, housing and commercial building. As democracy becomes entrenched in African states, it brings increasing political stability enabling rapid economic growth, growth in infrastructure such as roads, housing, schools, etc built from cement.
With steady population growth, younger and more mobile population drive the need for building, while the emerging middle-class fuels increasing consumerisation and access to credit.
