FEMI Otedola’s recent acquisition of Dangote Cement shares has sparked reactions from stakeholders in the capital market.
Otedola sparked controversy among stakeholders in April 2023 when he acquired 2.25 billion shares of Transnational Corporation Plc (Transcorp) to challenge the controlling power of his rival billionaire friend, Tony Elumelu.
On Monday, January 22, Otedola announced acquiring a significant share in Dangote Cement in a statement, confirming an earlier report of his buying interest in the Nigerian most capitalised stock, which crossed the N10 trillion mark at the close of trading on Friday.
Otedola’s move to acquire shares in Dangote Cement might elicit reactions given his similar move for Transcorp shares, the National President of New Dimension Shareholders, Patrick Ajudua, told The ICIR.
He, however, noted that it was within Otedola’s right to acquire shares of any companies he deemed suitable.
“But the takeaway here is the positive impact such a move has on the shares of Dangote Cement on the floor of the Exchange. The move has resulted in more than 30 per cent share appreciation of Dangote Cement shares within three days of trading.
“So for investors in the company’s shares, it has created better yield and good returns on their investment,” Ajudua said.
For the national chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, Dangote Cement only has strong competitors in the industry apart from Lafarge Cement and BUA Cement.
“Is it that Femi wants to gain experience and go into cement production, or could it be another way to diversify into another area of interest? This will be the first time he will invest in this company since its inception,” he said.
Okezie further told The ICIR that shareholders had no problem with Otedola entering into acquiring shares in Dangote Cement.
“It is a welcome development for me. There is no problem with Femi Otedola coming on board in that sector. After all; he is not a stranger in the boardroom of the quoted company,” he added.
An investment and portfolio analyst, Abel Ezekiel, opined that Otedola seemed like a “pump-and-dump” investor who stirs up unnecessary acquisitions in the capital market.
“He is the only one who understands the aims behind all his activities. He stirred up FirstBank’s price recovery and movement, having targeted many shares and becoming the bank’s chairman.
“Now he is moving into Dangote Cement. It is not as if Dangote Cement is seeking a merger whereby you will say maybe through that, he can become a substantial shareholder. Look at what is happening in Dangote Sugar and NASCON (NASCON Allied Industries), which people are looking towards the birth of Dangote Foods.
“Look at WAPCO (Lafarge Africa); the company has languished below N50. It has even recently moved to the current price, courtesy of the rally in the capital market. This is a company he (Otedola) can pump up to contend with all these BUA Cement and Dangote Cement,” Ezekiel argued.
Ezekiel worries that Otedola could invest in Dangote Cement, move the price up and then dump the shares in the hands of innocent investors.
He added that Dangote Cement was going into N600 on N20 dividends. “Is that worth declaring? Will that justify the price at the end of the day?” he queried.
In the official statement he issued on Monday, Otedola’s move underscores his confidence in Dangote Cement’s potential to generate foreign exchange for the country and his dedication to supporting businesses contributing to Nigeria’s economic resilience.
“Dangote Cement’s export capabilities and extensive operations across Sub-Saharan Africa are essential for regional economic integration and growth. My investment is a testament to my confidence in its potential to propel Nigeria’s and Africa’s industrial and economic development,” Otedola said.
He maintained that Dangote Cement’s unique position with two export terminals offered a substantial opportunity to earn foreign exchange, which is crucial for Nigeria’s economy, adding that the company’s pan-African presence makes it an ideal investment choice.
“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 prioritise their shareholders,” he added.
Otedola owns businesses in oil and gas, hotels, real estate and investments, and he is the current executive chairman of Geregu Power Plc.