Dangote Cement Plc, Africa’s biggest producer of the building material, is working with three banks to raise as much as $5 billion in a London share sale, said two people with knowledge of the plan.
Dangote will probably seek $3 billion to $5 billion in a London sale of global depositary receipts, valuing the company at as much as $20 billion, said the people, who declined to be identified because the plans are private. Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are helping Dangote prepare the sale, slated for next year, the people said.
The Lagos-based company, which raised 13.5 billion naira ($90 million) in an initial public offering in October, plans to increase capacity more than fivefold by 2015 to 46.2 million tons through investing in Nigeria and other African countries. Demand for cement in Nigeria, sub-Saharan Africa’s second-biggest economy and the continent’s most-populous nation, is expected to rise 45 percent in 2010, Stanbic IBTC Bank Plc said in October.
Tony Chiejina, Dangote’s spokesman in Lagos, declined to comment when reached on his mobile phone. The cement producer is 96 percent owned by Nigerian billionaire Aliko Dangote’s Dangote Group.
Dangote Cement, valued at $12.8 billion in Lagos trading, surpassed Nigeria Breweries Plc on its Oct. 26 listing date to become the heaviest weighted stock listed on the West African nation’s bourse.
‘Absorb the Volume’
Dangote Cement is planning the sale because the Nigerian market isn’t “deep” enough to absorb the volume of shares needed to meet a required 25 percent free float, said Babatunde Obaniyi, an analyst at Afrivest West Africa Ltd., one of the advisers on Dangote’s October IPO.
“The best thing to do is to look for a market that is deep and can absorb the volume of shares without having a negative effect on pricing,” Obaniyi said by phone from Lagos today.
A spokeswoman at Goldman Sachs in London declined to comment. Brian Marchiony, JPMorgan’s spokesman in London, and Michael Wang, Morgan Stanley’s spokesman in London, declined to comment.
Global depository receipts are negotiable certificates held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country.
Companies from Russia and Ukraine are among those that sold GDRs in London this year to gain better access to international investors. Mail.ru Group Ltd., a Russian internet company, raised $912 million last month. Ukraine’s largest egg farmer, Avangardco Investments Public Ltd., sold $187.5 million of GDRs in April, according to data compiled by Bloomberg.