The Public Investment Corp., Africa’s largest asset manager, will consider investing in more companies linked to Aliko Dangote, the continent’s richest man, as it seeks to tap industries benefiting from economic growth.
The pension fund this week invested $289.3 million in Nigeria’s Dangote Cement Plc (DANGCEM) to take a 1.5 percent stake and said the deal will also offer opportunities in Dangote’s sugar, flour, oil refinery and port operations, Fidelis Madavo, head of resources at Pretoria-based PIC, wrote by e-mail yesterday.
The fund has as much as $7 billion to invest in Africa and is targeting as many as 20 listed stocks across industries such as consumer, infrastructure, telecommunications and agribusiness as growth rates accelerate, he said. Shares of the group’s sugar and salt businesses rose as much 10 percent after the comments.
“This rally might be sustained for the next couple of days,” Lanre Buluro, head of research at Primera Africa Securities Ltd., said by telephone from Lagos. “I’d like to see if the PIC will look into other blue chip companies outside of Dangote in our economy. That would be positive for our market.”
Nigeria’s $269 billion economy, Africa’s largest outside South Africa, will grow 7.2 percent this year, International Monetary Fund projections show. That compares with an estimated 5.6 percent growth rate for sub-Saharan Africa.
Dangote Cement, Africa’s biggest producer of the building material, plans to expand significantly throughout sub-Saharan Africa, Madavo said. Dangote Sugar Refinery Plc (DANGSUGA) rose 10 percent, before closing 0.7 percent higher at 12.85 naira at the 2:30 p.m. close in Lagos, while Dangote-owned National Salt Company Nigeria Plc (NASCON) also added 10 percent, before closing 4.8 percent higher to a five-year high at 14 naira.
The cement deal “offers the PIC other investment opportunities in Dangote group portfolio companies,” Madavo said in the response to questions. The company is “Sub-Saharan Africa’s largest and most efficient cement producer,” he said.
The Lagos-based cement company, West Africa’s largest by market value, can produce 19.3 million metric tons in Nigeria, with plans to increase that to 29 million metric tons by 2015. Operations will start in Cameroon, Zambia and South Africa in 2014, and the Democratic Republic of Congo in 2015, Chief Executive Officer Devakumar Edwin said in April.
Dangote Cement will probably list shares in London in the fourth quarter of 2014 or first three months of 2015, Dangote said last month in an interview in Cape Town, where he also said he’s negotiated $4.25 billion of loans to build a refinery in Nigeria, Africa’s biggest oil producer.
Dangote has an estimated wealth of $23.1 billion and is the world’s 25th richest person, according to the Bloomberg Billionaires’ Index, the majority shareholder of Dangote Cement, Dangote Sugar and National Salt. Last year he sold a majority state in Dangote Flour Mills Plc (DANGFLOU), which gained 9.9 percent today, to Tiger Brands Ltd. (TBS), South Africa’s largest food company by market value.
Dangote Cement’s stock has advanced 55 percent this year to 199 naira, compared with a 29 percent rise of the Nigerian Stock Exchange All-Share Index (NGSEINDX), the world’s fifth-best performer. The company’s stock rose as much as 3.3 percent, before declining 5.2 percent at the close in Lagos.
The PIC began expanding in the continent when it invested $250 million in Togolese lender Ecobank Transnational Inc. (ETI) in 2012.