Top Nigerian cement firms are racing for investors both in the country and abroad to boost liquidity and help in expansion plans.
Dangote Cement for instance is said to be looking for $500m from a Eurobond sale and would issue 300-billion naira in local-currency bonds to refinance debt and boost expansion.
Lafarge Africa, on the other hand is seeking to raise about 100-billion naira through equity or debt on top of a rights issue of about 130-billion naira late last year. The Lagos-listed unit of Switzerland-based LafargeHolcim is also looking to expand its operations across Africa.
Another Nigerian cement maker Ibeto Cement Co. Ltd. has signed a deal to get $850 million in financing from Milost Global Inc, according to the New York- based private equity firm.
Reports indicate that Milost will provide $500 million in equity and $350 million as debt to the Nigerian cement maker.
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The Nigerian cement makers plan to expand comes at a time when sub-Saharan African economies are strengthening and infrastructure spending rising.
For instance, in the wake of of a fast rising population, demand for affordable housing in Africa is at fever-pitch.
African countries are also investing in transport infrastructure such as roads,rails and ports.
Legislators in Nigeria have approved a 2018 budget of 9.1-trillion naira ($25bn) this month, the nation’s biggest spending plan yet, with almost a third of it going into roads, rail, ports and power.
In Ethiopia where Dangote Cement and larfage are operating, the government is promising to double its existing road network by 2020.
In Kenya housing and infrastructure has been given top priority, with an initial plan to construct 30,000 houses underway. And construction of SGR railway line from the capital Nairobi to a Naivasha is currently ongoing.
And this is what Nigerian cement firms like Ibeto are seeking eyeing in their expansion plan.
“Our key strategic objective in expanding our cement business in Nigeria and the West African subregion is to make the building product affordable for Nigerians and tiers of government in such a way that they should be able to develop modest homes for themselves and their families and that includes road infrastructure,” said Dr Cletus Ibeto, Chairman of Ibeto Cement.