(Ecofin Agency) - The group once again assumed the leadership of the Nigerian financial market with a record trading day on the Lagos stock exchange and a close to US$256 million stock lending operation. The development allows Dangote Group to test investors’ perceptions.

On Wednesday, November 2, 2022, Dangote group regained its leadership of the Lagos stock exchange with its subsidiary Dangote Cement becoming, once again, the most valued company on the financial market. The 2.2% loss, on Thursday, November 3, was not enough to erase the 8.8% gain recorded by the group on the exchange two days earlier. Thanks to the rise, its market capitalization jumped to US$9.2 billion, compared with just US$9 billion for MTN Nigeria, which assumed the leadership when Dangote Cement lost it.  

Indeed, a few days ago, MTN Nigeria outpaced Dangote Cement as the leader of the Nigerian stock market, by market capitalization, profitability, and free cash flow. For many years, Dangote Cement was the undisputed leader of this financial market and the arrival of MTN has created some competition, especially for index funds tracking the performance of listed companies in emerging countries.

There was no specific announcement on the November 1, 2022, trading day but, the industrial group held an investor conference that day to discuss its Q3-2022 performance. Despite the record jump, there is a need to wait for future development to assess investors’ commitment to Dangote Cement.

The group will have another opportunity to test investors’ interest as it is preparing to source NGN112.4 billion (US$256 million) from the Nigerian capital market through the issuance of debt instruments. The fund should enable it to finalize the construction of its oil refinery. Although highly rated, the deal was structured with an interest rate between 15.5% and 15.75%.

The seemingly high yield was not caused by the group’s fundamentals. It was rather due to inflation (+22.5%), which forced the central bank to raise its key rates, increasing borrowing costs.  Dangote Group remains one of the largest conglomerates in Africa. It operates in eleven sectors with its oil refinery (already touted as the largest on the continent) slated for possible launch in the first half of 2023.