Dangote Cement Plc, the most capitalized company on the Nigerian Stock Exchange has concluded block sale of about 550.09 million of its shares at N227.5 per share worth N124.15 billion.
The trade, which was consummated in a one-off deal to a single strategic investor, is in compliance with the NSE minimum free-float requirements and it represents 3.2 percent of the company’s market capitalization as of Monday, December 18, 2017
Businessamlive findings revealed that the trade was negotiated in a deal between the seller, Meristem Stockbrokers Limited and the buyer, CSL Stockbrokers Limited.
At the end of the day’s trading session, Dangote Cement’s shares price closed four percent down to N230.
The Nigerian Stock Exchange, last July approved a block divestment of about 852,025,370 ordinary shares of 50k each, representing five percent equity interest in Dangote Cement Plc. This latest trade appears to be the final trade for the block sale.
The NSE had instructed some listed companies to comply with the minimum free-float in line with the set standards under which they are listed. In the stock market, free-float represents the portion of shares of a company that are in the hands of public investors as opposed to locked-in stock held by promoters, company officers, controlling-interest investors, or government.
Analysts say it helps to better calculate the market capitalisation of companies because it provides a more accurate reflection (than entire market capitalisation) of what public investors consider the company to be worth.
The NSE rules requires that companies on the Main Board comply to a free float of 20 percent of market capitalisation while for companies in the Alternative Securities Market (ASeM) is 15 percent.
For companies on the Premium Board a minimum free float requirement of 20 percent of its issued share capital, or the value of its free float shares is equal to or above NGN40 billion on the date the exchange receives its application to list.
However, waivers are granted if the exchange believes that the market can operate properly with the existing level of free float and available securities, and if it receives an undertaking from a majority holder of shares in the company holding a number of securities equivalent to at least five percent of the issued shares, to make available to the investing public a specific number of securities, required to restore the Issuer to the required free float level within a period not exceeding three years.
Africa’s richest black man, Aliko Dangote, indirectly owned about 90 percent of the 17 billion ordinary shares of the company, via its holding company, Dangote Group Plc.
This current sale is the third since August 2017 in what investors see as a gradual bid to meet the exchange’s free float requirement. The company currently has less than 10 percent of its shares as free float instead of the regulatory requirement of 20 percent.
The company sold 128.5 million shares at N210 in November and last August sold a 2.3 percent stake to foreign investors for a purchase consideration of about N86 billion.
Dangote Industries limited (DIL) had in 2013 sold a 1.5 percent stake in Dangote Cement to South Africa’s Public Investment Corporation (PIC) for $289.3 million and a 1.4 percent stake in Sovereign Fund Investment Corporation of Dubai in 2014 for $300 million.