22 October 2012
R1.95bn in local financing for Sephaku Cement, South Africa’s first homegrown cement market entrant in over 70 years affirms belief in its sustainability; emphasises the developmental role of its industry; and demonstrates confidence in the value of SA as a business destination.
Johannesburg, 22 October 2012 – Major South African banks, Standard Bank and Nedbank have jointly funded the debt requirements of Sephaku Cement in a ten year deal valued at R1.95bn. Sephaku Cement were advised on this transaction by Sasfin Capital. Signed today in Johannesburg, the financing agreement marks a critical juncture for the company in its go-to-market preparations and signals a strong vote of confidence from the local market.
The closure of the debt and commencement of the drawdown of its loans is a major milestone for the Dangote Cement subsidiary and associate of JSE-listed Sephaku Holdings. The agreement effectively closes the gap in terms of the required capital for Sephaku Cement to be fully prepared for market entry and a significant competitor in wholesale and retail cement trade.
The significance of this deal, says Sephaku Cement CEO Pieter Fourie “goes beyond cement. It indicates a strong, new commitment to industrial development in South Africa. Through new infrastructure establishment in Mpumalanga and the North West Province and the resulting local job creation, the investment benefit will extend to provincial and community development.”
In addressing infrastructure deficits and meeting unmet needs for the likes of housing, the cement industry is a building block of socio-economic development. This is emphasised by Sola David-Borha, CEO of Stanbic IBTC in Nigeria who says that “as a result of the transaction, we will see Sephaku become a leading cement producer in the region, enabling significant job creation with wider economic benefits.”
Of the total capital raised by Sephaku Cement, just over 50% of total procurement spend will be invested locally. In addition, the combined plants will create direct employment opportunity for around 400 local people and up to 3,000 jobs indirectly.
Greg Webber, Head of Mining Finance, South Africa at Nedbank Capital says: “We are proud of the role we have played in financing the development and construction of efficient new cement capacity by Sephaku Cement and of our association with the largest investment by an African company into South Africa. This signifies a strong endorsement of South Africa’s economy and more particularly the need to meet our growing housing and infrastructure requirements.”
David-Borha adds: “The Standard Bank team in Lagos and Johannesburg is delighted to have been able to help put together and invest in this landmark deal, which sees the leading Nigerian firm Dangote making the largest ever foreign direct investment by an African company into South Africa. This transaction goes to the heart of Standard Bank’s core strategy of encouraging investment in infrastructure development in our home market, Africa,” she says.
Sephaku Cement is focused on the goal which Chairman, Aliko Dangote describes as being to create modern cement plants in strategic locations in Africa. “It is all systems go for us. Our success is being backed 100% by our 100% African partners. We hold ourselves accountable to live up to the confidence placed in us by them,” concludes Fourie.
About Sephaku Cement
Sephaku Cement was established in 2006 and is the first clinker producer in South Africa since 1934. Sephaku Cement, an associate company of JSE-listed Sephaku Holdings Limited, is a 64%-owned subsidiary of Dangote Cement Plc. Dangote has invested more than R1.1 billion in the venture, representing the largest investment in a South African enterprise by an African company.