Nigeria’s Dangote aims for $40 billion listing


LAGOS |
Wed Jun 13, 2012 7:30pm BST

LAGOS (Reuters) – Nigerian billionaire Aliko Dangote is aiming for a valuation of up to $40 billion (25.72 billion pounds) for his cement company at its London listing next year, several times that of top global rival Lafarge.

Africa’s richest man told Reuters in an interview in Lagos that funds from the offer of 20 percent of the shares in the company were not needed for its rapid expansion, but would be used to pay off investors, including himself.

Dangote’s cement empire stretches from Senegal to South Africa, benefiting from a construction boom across one of the world’s fastest growing continents.

In a difficult global environment for share offerings, Dangote said he was not discouraged by the tumble in Facebook’s (FB.O) shares since they listed last month.

“Where the assets of Facebook were hype, we have real assets,” said Dangote, setting out the market capitalisation he expected for his firm at the listing planned for late next year.

“It depends on the market, but it should be something like $35 to $40 billion dollars. We are targeting something like that,” said Dangote, 76th on the Forbes list of the world’s billionaires and its fastest riser in 2011.

He said his main aim of the London share offer was to strengthen corporate governance.

If he raises as much as he hopes, it would value Dangote cement at much more than rival Lafarge (LAFP.PA), which has a market capitalisation of around 9 billion euros ($11 billion).

Dangote Cement (DANGCEM.LG), Nigeria’s biggest listed company, currently has roughly the same market value as Lafarge.

Dangote Cement trades at 9.3 times forward earnings whereas Lafarge trades at 11.4, according to Reuters data. But Lafarge’s revenues were more than 13 times as high as Dangote’s last year.

Dangote said his rapid expansion would make his company considerably larger than it is now by the time of the listing – with new plants due to be completed in 13 other African countries by then.

Lafarge, meanwhile, is in the midst of a cost-cutting programme in an effort to offset the impact of stagnation in its main markets and to cut its debt.

Dangote said he had raised his production target to 60 million tonnes a year by 2015 from around 28 million tonnes at the moment.

Dangote commissioned an expansion of his Obajana cement plant in central Nigeria on Monday to raise capacity to 10.25 million tonnes a year, making it one of the world’s largest.

The speed of the company’s expansion across Africa has raised alarm bells amongst some analysts, but Dangote said he had no concerns at burning through cash too quickly.

“Cash flow is excellent, so the cement business does not really need to raise funds,” he said in his office in a Lagos business district, adorned with a giant photo of the Obajana factory and a large map of Africa.

He said the company’s lack of debt would be a big advantage if conditions turned harsher.

($1 = 162.5500 naira)

($1 = 0.7953 euros)

(Editing by Matthew Tostevin)