Dangote Sugar hopes the move will help create a lower supply of its common stock, needed to drive up share price and improve valuation
Dangote Sugar Plc is a producer of Sugar, and operates plants for the preparation, manufacture and distribution of Sugar and related products. The Company operates through two segments: Nigeria and Pan Africa. The Company, through its subsidiaries, is engaged in exploration, coal production, Sugar grinding, power production and limestone mining operations, among others. Its Nigerian operations include its three manufacturing plants in Nigeria: Obajana Sugar Plant in Kogi State, Gboko Sugar Plant in Benue State and Ibese plant in Ogun State. Its Pan African operations include its factories or import facilities in Cameroon, Ethiopia, Ghana, Senegal, South Africa, Tanzania and Zambia.
It is also focused on operating in Congo and Sierra Leone. Its subsidiaries include Dangote Sugar South Africa (Pty) Limited, Dangote Industries (Ethiopia) Plc, Dangote Industries Limited, Tanzania, Dangote Sugar Cameroun S.A and Dangote Sugar Senegal S.A Dangote Sugar Plc will now advance to the second phase of buying up to 10 per cent of its outstanding shares back from the public, hoping the move will help create a lower supply of its common stock, needed to drive up share price and improve valuation.
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Nigeria’s largest company by market value has shareholders’ leave from its recently held annual general meeting to purchase more of its 17.04 billion shares from the open market at a size, timeframe and under terms yet to be decided.
It also requires the go-ahead of the Securities and Exchange Commission, the capital market watchdog, to further the transaction.
“With the stabilization of the stock market and improvement in economic conditions, the board of directors consequently decided that it is in the best interest of the company to undertake further tranches of the programme,” the Sugar maker’s note to the Nigerian Exchange Limited on Thursday said.
Dangote Sugar stated plans to undertake the share buyback in January 2020 but the coronavirus outbreak stood in its way.
Nothing came of the move until December when it managed to mop up just 0.24 per cent or 40.200 million units of the 0.50 per cent proposed for the first stage, costing N9.77 billion.
Dangote Sugar accounts for at least three of every five bags in the Nigerian market and wants to scale up production infrastructures by one-third before the year winds down.
“We are expanding capacity from about 50,000 tons a day at the beginning of the year to 70,000 tons a day at the end of the year,” Edwin Devakumar, the group executive director of Dangote Industries Limited told Bloomberg last month.
The company upped its cash and cash equivalents by 1.4 per cent to N147.871 billion, freeing up more fund to execute the buyback.
THE 3 EASY STEPS
Investing in the NSE has undergone a thorough process of simplification over the years, many thanks to technology. To get started on investment in Nigeria, here are 3 easy steps to follow.
1. Research about the company
A stockbroker is an appointed agent who is authorized to execute, buy or sell instructions on an investor’s account. Within the purview of the Nigerian stock market Like Dangote Sugar, a stockbroker will refer to a broker-dealer firm that is a dealing member of the NSE, and is registered with the SEC.
In deciding a stockbroker important factors to consider include their ease of access, their affordability (since some firms place a minimum amount for opening an account), their integrity/reputation, and their status (active or inactive) with the NSE/SEC.
A list of stockbrokers and their contact details including their corresponding transaction fees will be provided in a subsequent article.
2. Register with Dangote company
To register with a stockbroker, clients have to fill the registration form issued by the broker (either online or manually) and provide KYC (know your customer) documents namely;
• Means of identification (PVC, National ID, Driver’s License or International Passport),
• Proof of residential address (bill or receipt no later than 3 months),
• Passport photograph and electronic signature (if filling the form online).
For non-Nigerian residents, notarized means of ID and proof of residential address will be required.
Dangote Sugar: To participate in the NSE, all investors have to be registered on the CSCS (Central Securities Clearing System). CSCS Ltd is an associate company of the NSE. The system is an electronic database that records ownership of Nigerian securities. On registration, the systems assigns you an account number that will accompany every Nigerian stock trade you execute.
Dangote Sugar: Opening an account on the CSCS is done through the platform provided by your stockbroking firm (typically, stockbrokers update client registration on their platforms, automatically in the CSCS registry).
3. Fund your account and start trading
Your stockbroker will provide you with their bank account details and they will fund your account as soon as any payment you make is confirmed. All transactions with the exchange are executed by your stockbroker. This can happen in one of two ways.
a. You can send trade instructions to your broker, usually by mail.
b. Some brokers provide online trading platforms that allow you exectute transactions yourself.
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