Dangote Cement was the most attractive stock on Tuesday at the Nigerian Stock Exchange (NSE) as a major investor snapped up about 2.44 per cent equity stake in the cement group.
The special acquisition transaction was struck under pre-arranged window of the Exchange. A report on the transactions indicated that six deals were struck for the transfer of 416 million ordinary shares of 50 kobo each at a below-the-market price of N210. The transactions, valued at N87.4 billion, represents 2.44 per cent of the total issued shares of Dangote Cement and the price represents a discount of 12.5 per cent on the cement company’s closing market price of N240 at the Exchange yesterday.
The deals, according to the report, were done through the off-market, negotiated cross deals window of the Exchange and as such was not subjected to the dynamics of price discovery for the particular period. Off-market trade implied that the deal was sealed outside the floor of the NSE.
Dangote Industries Limited (DIL)-owned by Africa’s richest billionaire, Aliko Dangote, owns the majority equity stake of more than 90 per cent in Dangote Cement and it is the only investor with such large volumes as traded on Tuesday.
The negotiated cross deal platform of the Exchange is a special-purpose trading platform that is meant for voluminous transaction. By the cross deal, it implies that the buyer and the seller had been prearranged and the transfer at the stock market was a mere perfection of the agreement between the two. The negotiated cross deal allows the parties to the deal to close the deal at reduced cost.
While the details of the new major investor are still unknown, Meristem Stockbrokers Ltd sold the shares to Stanbic IBTC Stockbrokers Ltd, both stockbroking firms obviously acting on behalf of third party investors.
Stanbic IBTC Stockbrokers is a subsidiary of Stanbic IBTC Holdings, a member of South Africa’s Standard Bank Group. Stanbic IBTC is known to act on behalf of foreign portfolio investors.
South African government had in June 2013 bought into Dangote Cement. The South Africa’s government, through its wholly owned investment company, Public Investment Corporation of South Africa (PIC), had acquired 1.5 per cent equity stake in the Nigerian cement group to emerge the second largest equity investor.
The market value of Dangote Cement crossed the N4 trillion mark to N4.09 trillion yesterday after the most capitalised company at the stock market posted unusually large gain of 7.20 per cent or N16.25 per share to close at N240 per share. The uptrend helped to rekindle the rally at the stock market, halting a two-day decline.
Dangote Cement’s N4.09 trillion represented 32.3 per cent of the total market value of all quoted equities on the NSE. Total market value of all quoted equities at the Exchange closed on Tuesday at N12.656 trillion.
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