Nigerian entrepreneur Femi Otedola has revealed he plans to expand his stake in Dangote Cement Plc, a move that has contributed to the recent surge in the wealth of Aliko Dangote, the founder of the cement giant.
This decision follows Otedola’s recent acquisition of N6 billion worth of Dangote Cement shares, which has significantly boosted the company’s market performance.
Dangote Cement’s shares have witnessed an impressive rally, more than doubling in the current month alone, adding a remarkable $6.9 billion to Aliko Dangote’s wealth, which reached $22 billion as of Thursday, according to the Bloomberg Billionaires Index.
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Otedola’s decision to expand his holdings comes at a pivotal moment for Dangote Cement, which has emerged as Nigeria’s leading company by market capitalization, surpassing Airtel Africa. The company, currently valued at an impressive N8.35 trillion, crossed the N10 trillion threshold earlier this week.
Otedola stated that his recent purchases are still a “work in progress” and were initiated last week. He plans to disclose the extent of his stake once it reaches a regulatory disclosure threshold.
Dangote Cement, recognized as Africa’s largest producer of construction materials, has played a crucial role in Aliko Dangote’s diversified business portfolio. The surge in its share prices is not only propelling Aliko Dangote’s wealth to new heights but is also influencing the performance of the Nigerian stock market. With the cement maker being a significant component of the equity benchmark, the NGX All Share Index has experienced a notable 36% jump, marking the best January performance since at least 1998.
Otedola’s move to increase his holdings in Dangote Cement aligns with his track record of making strategic investments that have triggered substantial rallies in the shares of the targeted companies. Notable instances include his investments in FBN Holdings Plc in 2022 and Transnational Corp. of Nigeria in the previous year.
Otedola said Dangote Cement’s unique position as the “only Nigerian cement company with two export terminals and a substantial export capacity” makes it an attractive investment opportunity. He highlighted this uniqueness and sees the cement maker as a proxy for Dangote’s colossal new refinery, which is considered the world’s largest facility of its kind in a single location.
The diversification into refining positions Dangote Cement to benefit from the growing demand for refined products both within Nigeria and on the international stage.
“With projected annual revenues of around $30 billion from products like urea, fertilizer, polypropylene, and other refined petroleum products, the refinery will substantially enhance his business interests beyond the traditional sectors like cement,” Otedola said.
While Dangote Cement has demonstrated remarkable performance with its 81.4% return in the last 52 weeks, the majority of its outstanding shares, approximately 85.8%, are under the control of Dangote Industries Limited, overseen by Africa’s wealthiest individual, Aliko Dangote.
The surge in the cement maker’s shares has led to speculation about the potential listing of other entities within the Dangote Group, including the newly operational Dangote Petrochemical Refinery. Analysts project that the listing of Dangote Refinery, along with Dangote Foods (a result of the ongoing merger of Dangote companies) and NNPC Limited, could be major boosts for the capital market.
Otedola’s investment comes at a crucial time for Dangote Cement, as the company has been contending with strong competition from its rival, BUA Cement. The latter lowered its prices late last year, responding to increased criticism regarding the high cost of cement in Nigeria. The move was seen by many as a competition strategy, even though BUA Cement’s Chairman, Abdul Samad Rabiu, stated that it aligns with the company’s mission to support development in the building materials and infrastructure sectors.
As investors closely watch the progress of Dangote’s newly operational Petrochemical Refinery, the milestone achieved by Dangote Cement on the NGX has fueled optimism of potential foreign investment into other subsidiaries of the Dangote Group. The new 650,000 barrel-a-day oil refinery, which started operations earlier this month, is expected to contribute significantly to Dangote’s business interests beyond traditional sectors.
Otedola’s decision to expand his holdings in Dangote Cement is seen as a confidence booster in the company’s future growth prospects, particularly with the operationalization of the refinery. Analysts believe the investment signals a positive trajectory for both investors and the Nigerian economy.