Dangote Cement hits N10tn capitalisation as Otedola buys shares

The market capitalisation of Dangote Cement hit N10tn on Monday, emerging as the first company to achieve that milestone on the Nigerian Exchange.
This is as billionaire businessman, Femi Otedola, who called the founder of the Dangote Group, Aliko Dangote, his “bestie”, had made a significant acquisition of Dangote Cement shares.
The firm closed trading with a N10.098tn market cap after gaining N917bn, following a 9.99 per cent rise in its stock.
The company closed in 2023 with a market cap worth N5.451tn.

Its share at the close of trading on Monday stood at N590.60 per unit.
This month, it displaced Airtel Africa as the most capitalised stock on the local bourse.

In terms of capital gains, Dangote Cement investors have seen 85.25 per cent appreciation in their investment.

Otedola, explaining his reasoning for buying stakes in Dangote Cement in a statement issued on Monday, said the potential of Dangote Cement to earn foreign exchange as well as its compliance with Environmental, Social, and Governance principles made it an ideal investment for him.
 “Dangote Cement’s unique position with two export terminals offers a substantial opportunity to earn foreign exchange, crucial for Nigeria’s economy. This, along with the company’s pan-African presence, makes it an ideal investment choice.

“Dangote Cement’s strong corporate governance and impressive ESG compliance track record make it an ideal investment choice. It represents the type of company that not only contributes to Nigeria’s industrial strength but also aligns with my vision for ethical and sustainable business practices,” Otedola stated.

Otedola added that Dangote Cement’s track record of dividend payments and its commitment to sustainable business were major attractions.

He noted, “In my investment decisions, I focus on long-term wealth preservation and ensuring shareholders are the ultimate beneficiaries of a company’s success. Companies like Dangote Cement, which consistently deliver value to their shareholders, are fundamental for sustainable economic growth. My investment reflects my belief in its capacity to continue providing significant returns and my commitment to businesses that prioritize their shareholders.”

As of February 2023, the parent company, Dangote Industries Limited held 85.8 per cent stake in the company.
In April 2023, Otedola offered to buy indigenous conglomerate, Transnational Corporation Plc, after buying over five per cent stake in the company.

His offer was, however, rejected and he has since divested from the firm.
Speaking on the development, the Managing Director of APT Securities and Funds Ltd, Garba Kurfi, whose firm was one of the stockbroking firms that midwived the Transcorp deal last year, said “Over 50 per cent of the shares are owned by Dangote. Whoever is buying won’t make any difference. The question is if Otedola bought shares in Dangote Cement, will it make any change? How many billions of naira will you put in Dangote Cement that will change it?

Commenting on the rise in the market cap of the cement company, financial and economic analyst, Rotimi Fakayejo, highlighted how three factors affect stocks in the capital market.

He said, “In the market, three factors govern share price movement. Number one, fundamentals that are corporate governance, dividend payment and sound financials. Number two is the forces of demand and supply. If more people are willing to buy the shares then definitely, the price will go. Then, number 3, market hearsay. The market hearsay now is that Femi Otedola is buying Dangote Cement shares. Everybody knows that when he was buying FBN Holdings shares, the shares moved from about N8 to about N15.

“So, if he has a large war chest to buy Dangote Cement, the truth of which is not much, then definitely, we will expect this kind of appreciation.

 “The bottom line is Nigerian shares are underpriced. We believe that Dangote Cement should be among the stocks that will rank at least $1, which implies that it should be priced above N1,000. Some in the mid-term, we are going to see it get to that point.”