On January 7, 2019, on the Nigerian Stock Exchange, the share of  Lafarge Africa lost 1.7% to reach NGN11.35. This loss is not that much of a surprise because this trend was common in 2018.

What is noticeable however is that at its present value, the group’s share is now 5% below the price proposed to subscribers for the capital increase launched on December 17, 2018, and which will be concluded on January 23, 2019. For this capital increase, each share of 50 kobo is offered to potential subscribers at NGN12.

When the operation was launched, the offering price was 10.5% below the stock price and, the buyers could have made an immediate gain. In the current market conditions, investors who have already subscribed or are going to do so will sustain losses.

Some analysts of the Nigerian stock market estimate that investors will be better off waiting for those shares to hit the secondary market to buy them at their real market value. However, it is possible that the group already anticipated such losses in view of its poor Q3, 2018 performances.

In the first nine months of 2018, its pre-tax profits were -14.8 billion Naira while a year earlier, it was NGN1 billion. Its net result was marked by a loss of NGN10.3 billion. This could not reassure investors since the fourth quarter showed no improvement.

Today January 8, 2019, the market opened with a slight 0.4% improvement of the shares ; a change which is important to closely monitor till the end of the subscription period of the capital increase.

Idriss Linge