Sephaku Cement, the player which is preparing an ambitious Greenfield launch into the South African market, crossed a major hurdle this week after securing R1.95bn funding meant that is meant to secure its go-to-market preparations.
The funding came from Standard Bank and Nedbank in what the group said signal signals a strong vote of confidence on its propects. Sephaku Cement is a subsidiary Negerian based Dangote Cement which has operations across the sub Saharan region. The operation also features local partners in form of the JSE listed Sephaku Holdings.
The group said the closure of the debt and commencement of the drawdown of its loans is a major milestone for the operation. “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.