Aliko Dangote’s group eyes more dollar bond sales to fund growth

Dangote Industries is seeking more opportunities to raise money from global investors after the African company made its first foray into international markets last month.

The industrial conglomerate is looking to the bond market to potentially fund some of its businesses, including energy and fertilizer assets, Dangote’s chief financial officer, Murat Erden, told Bloomberg News. Dangote Fertiliser, which operates Africa’s largest urea plant, raised $750 million from a private bond placement in April.

Owned by Africa’s richest man, billionaire Aliko Dangote, the company also spans cement and infrastructure businesses and is critical to the economy of Nigeria, where it is headquartered. Dangote Cement Plc alone generated almost $3.2 billion of revenue last year, while Dangote Sugar Refinery Plc produced around $610 million. The group’s oil refinery, the biggest in Africa, plans to increase capacity from 650 000 barrels of crude per day to 1.4 million by 2028.

Lagos-based Dangote, who is worth $35.4 billion on the Bloomberg Billionaires Index, has set a target of investing at least $40 billion to fund growth over the next five years. He wants to build the biggest deep-seaport in Nigeria, boost the output of urea to 12 million tons by 2030, diversify into liquefied gas, and construct a 20,000 megawatt power plant.

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Erden said that the company is “opportunistically” looking at issuing bonds to align the financing of some subsidiaries with their dollar revenues and to fund long-term capital investment programs. Plans to raise funds also include selling about 10% of the oil refinery in an IPO on multiple African stock exchanges this year.

Seeking core investors

While several Dangote entities have listed shares in Nigeria, none had raised financing from international capital markets before April’s transaction.

“For decades bankers have covered Dangote and have been hoping for a capital markets event across the group, so this was a very long time coming,” said Stefan Weiler, head of debt capital markets for Central Europe, the Middle East and Africa at JPMorgan Chase & Co., which, alongside Bank of America, helped arrange the private placement.

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The bond, which was sold to a small group of funds, marked an important step for Dangote “in establishing a long-term presence in international capital markets,” Erden said, deepening ties with investors who could help finance the group’s businesses.

By opting for a private placement over a syndicated sale, Dangote Fertiliser was able to handpick fund managers it thought would be helpful “not only to the fertiliser business but also for other Dangote companies in the future, and could become core investors,” Weiler said.

Issued at par just over two weeks ago, the bond has since risen to be quoted at around 101.7 cents on the dollar, according to price data compiled by Bloomberg.

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