The Making of a Nigerian Company into a Global Firm
In less than two decades, Ibeto Cement Company Limited has become a household name in Nigeria’s construction industry. Its recent strides in the industry, especially on the global scene is an indication of its passion for excellence and global best practi
The dominance of Ibeto Cement, in the SouthEast of Nigeria as a whole, is lent credence with the recent stride made by the company that has its eyes on the international markets beyond the shores of Nigeria. It is one of the players in the fast-growing cement industry in Nigeria and, by extension, Africa. To increase its production and packaging capacity, the company is currently developing two cement plants in Nigeria: one in Ebonyi State and one in Cross River State/ Abia State. Each plant is a state-of-the-art 6,000 tonne per day plant sitting on abundant deposits of quality limestone at both ends
The cement giant, Ibeto Cement Company, is a forward-looking business concern that is committed to global best practices. It is a dominant player in Nigeria’s cement manufacturing sector with a major control of the South-East market and nationwide acceptance as a leading manufacturing company. Some have claimed –apparently more out of personal opinions rather than facts –that Dangote Cement controls 65 per cent of the market share of cement in Nigeria. Even though Dangote ranks as the biggest player in the industry, the claim that it controls 65 per cent of the cement market cannot be true as there are no authentic statistics to back that up. While, admittedly, Dangote Cement is a popular brand of cement, Ibeto and other cement manufacturers (like Lafarge) also have considerable share of the market.
The dominance of Ibeto Cement, in the South-East of Nigeria as a whole, is lent credence with the recent stride made by the company that has its eyes on the international markets beyond the shores of Nigeria. It is one of the players in the fast-growing cement industry in Nigeria and, by extension, Africa. To increase its production and packaging capacity, the company is currently developing two cement plants in Nigeria: one in Ebonyi State and one in Cross River State/ Abia State. Each plant is a state-of-the-art 6,000 tonne per day plant sitting on abundant deposits of quality limestone at both ends.
Recently, the leading Nigerian cement company executed a binding MESA (Milost Equity Subscription Agreement) with Milost Global Inc. for a $850 million financing, of which $500 million is in equity and $350 million debt. It is a landmark that the Company has also started the process of going public in a reverse merger in the United States of America as efforts to become a publicly traded company.
On May 25, this year, the Nigerian billionaire and Chairman of Ibeto Group of Companies, Chief Cletus Ibeto, consummated the acquisition of the publicly traded company he will use to reverse the assets of his cement business in America – the final acquisition and definitive agreements have already been executed.
The transaction was solely advised by Palewater Advisory Group Inc., and the going public transaction will allow Ibeto Cement to raise enough capital in the US public markets outside the Milost financing as well and put the company in the forefront of the cement industry in Africa. As it stands, Chief Ibeto plans to grow the company beyond West Africa through the acquisition of other profitable cement businesses outside Nigeria within the next 12 months with a construction of two new plants to follow.
Concerning the new deal, Ibeto said: “Our key strategic objective in the vast and extensive development of the cement business in Nigeria and the West African sub-region is to make cement affordable to all Nigerians and tiers of government in such a way that they should be able to develop modest homes for themselves and their families inclusive of road infrastructure. As far as I am concerned and with the knowledge I have and what I know in this business, the cement business is an investors’ haven especially in Nigeria and a much more profitable business than even crude oil where a lot of people think is the best place to invest. This probably explains why the few people in the business have deliberately created very strong barriers to entry into the industry for prospective investors.
“It is therefore my honest belief that this reverse merger will enable us to accomplish this objective. In the end and, in line with our strategic intent and objective, we are geared to be a world-class cement company in terms of quality, affordability, innovation, service, environment, safety, and corporate governance and also to be a part of building the country’s needed infrastructure all of which certainly guarantees good returns on investment for the stakeholders.”
Current prices of cement in Nigeria are the highest at $180/ton in comparison to the listed international countries. Due to the high prices, the Nigerian cement market is a very attractive market for investors. It is also well known that only Nigeria and Senegal have Limestone deposits in commercial quantities in the whole of West African sub region (ECOWAS) — a fact which clearly reflects huge potential for export market for clinker cement produced in Nigeria.
It is imperative to state that some alleged reports from parts of Europe and the World Bank alluding to a saturation of the cement market in Nigeria stand against current facts. First, the reports were sponsored campaigns by competitors (monopolists) who are working day and night to preclude other prospective investors from establishing more cement plants in Nigeria. Second, the campaigns are designed to mislead and discourage financial institutions and investors from funding such projects thereby stifling competition in any form.
It could be explained that the competitors and monopolists who sponsored these negative campaigns are busy not only upgrading and expanding their existing plants but also trying to establish new cement plants in Nigeria. It is also compelling to note that while the Ibeto bagging plant was in production even in the presence of the local manufacturers, the company has been unable to meet up to 50 per cent of the demand for her product in her catchment zone in spite of the high cost of the product – the supply/ demand gap in the per capita consumption of cement in the South-East and parts of the South-South (a total of nine states) which represents the catchment market for the Ibeto Cement Company Limited.
The estimated demand for cement in that market is 4,749,730.80, which is more than twice the proposed installed production capacity of 6,000 TPD (2,200,000) of Ibeto Cement. Moreover, proximity to the company’s target market will also remain a key competitive advantage. The maximum travel time between the proposed plant site and the farthest unit within the target market is approximately 2.5 hours compared to about 8 hours from the closest competitor.
The Ibeto Cement is a renowned brand in the building and construction industry and had a strong market share within her customer base of the South-East/Southsouth and seeks to hold on to that. There is presently no cement manufacturing plant in the heart of its customer base (South-East) but more important in the heart of cement consumption in Nigeria being the South-East and South-South regions.
The company seeks to tap from the huge export potential within the ECOWAS sub-region by taking advantage of her export terminal located at the Ibeto Jetty in Bundu Ama, Port Harcourt. Market can be expanded to include neighbouring West and Central African countries with Senegal and Nigeria being the only countries in the regions with limestone deposit in commercial quantities. This has the potential for export of clinker from Nigeria to other neighbouring African countries. The Ibeto Cement is known countrywide and within the building and construction sector for its high quality. This factor accounts for the key reason why almost all the credible construction companies in Nigeria tend to patronise the product more than they do for other cement products.
On the plans of the company, Ibeto pointed out: “It has been a long journey since I have been in business and none of my companies or businesses has gone public so far. I had to come up with a strategy while I build a formidable structure for companies that will outlive me. Moving on, everybody knows that I have billions of dollar investments in Nigeria for myself, my family and the communities in which my businesses operate. But then the time has come for me to replicate the successes I have enjoyed in Africa on a global scale. My plan is to share my wealth of experience that have made me the doyen in business that I am today so as to ensure that which God has put in me as a gift to benefit people beyond Africa.
“For me, this is a legacy I am building for generations to come. Century Petroleum Corp is the vehicle I plan to use as a catalyst of empowerment for all Nigerian people all over the world as the shares of the company will be traded internationally. I am extremely excited to have acquired Century Petroleum Corp and, having mostly taken over the rein as the chairman of the board of directors of the company, will enable me to put together teams that will help grow the company and propel it and also members of the board that will help me breathe life into what Century Petroleum will ultimately become.”
No doubt, Ibeto’s years of experience in business as well as his success record, have proved that he has the ability to build organisations organically as he had done with the businesses he started from ground up and inorganically through businesses that he acquired as a means to grow swiftly in his “vertical integration strategy”.
Ibeto Cement Company Limited, located in Bundu Ama, Port Harcourt in Rivers State of Nigeria began cement bagging operations at its bagging terminal in Port Harcourt in 2005. It is an ultra-modern bagging plant with a flat-storage capacity of 50,000 metric tons and a production capacity of one metric ton per annum, which translates to a production capacity of over 4,000 metric tons per day.
It has two production lines, each with a capacity of 2,700 of 50kg bags per hour or designed total production capacity of 5,400 of 50kg bags per hour. It also has a third production line – popularly known as the “big/jumbo bag plant” – for big bags of 1,500 kilograms, and also fourth production line for bulk cement powder which is loaded on special cement trucks fitted with tanks and discharge pumps.
An integral part of the plant facility is a modern purpose-built jetty (Ibeto Jetty) that can take in ships of 190+ meters long with sophisticated and state-of-the-art shipunloaders and mounted at the waterfront on the Jetty to facilitate discharge of bulk cement from offshore and foreign mother vessels.
In line with the Nigerian Backward Integration Policy (BIP) on cement and in response to the Federal Government’s call to increase local production of cement, Ibeto Cement Company Limited acquired the premier Nigeria Cement Company Limited (Nigercem) which has a plant located in Nkalagu, Ebonyi State. The strategic acquisition of Nigercem is aimed at expediting Ibeto Cement’s local production of cement by resuscitating the Nigercem plant and developing the project, as a brand new dry process plant. Also, the Ibeto Cement Company Limited is also developing another 6,000 Metric Tons Per Day (TPD) Cement plant at Cross River State/Abia State of Nigeria.
Only a visionary and open-minded businessman like Ibeto can walk that path. As a world-class business leader and entrepreneur who has built successful companies and industries in Nigeria and beyond, Ibeto has impacted the cement market in Nigeria. It is no doubt that the latest deal with the American firm will enable Ibeto Cement Company Limited to raise sufficient capital to dominate the industry in Nigeria and the West African sub-region as a whole and cement its place among the leading cement companies in the world.
Ibeto, as a pragmatic and dynamic business mogul, is not only interested in establishing money-spinning enterprises. He has a passion for patriotism and the desire to make cement affordable and reliable, little he worked decisively to break the monopoly yoke illegitimately imposed on the Nigerian construction industry.
Inventive and hard-working, the billionaire in 2008 was awarded the national honour of Officer of the Order of the Niger (OON) from the Federal Republic of Nigeria for his outstanding contributions to the country through his manufacturing enterprise. In 2012, he was yet again awarded the honour of Commander of the Order of the Niger (CON) for his continued outstanding service to the nation.
To illustrate: Ibeto started out as a spare parts import dealer, after spending some time as an apprentice in the motor parts business. In March 1988, he stopped direct importation of lead acid automotive battery and plastic motor accessories after completing his factory in Nnewi. By 1995, the Ibeto Group had become one of the largest auto spare parts manufacturing firms in Nigeria.
By 1996, he had established Ibeto Petrochemical Industries Ltd., which is engaged in the blending of oil lubricants as well as the production of various types of petroleum products for local and international markets. The company owns the largest liquid storage facilities for petroleum products in Nigeria with a capacity of over 60,000 metric tonnes located at Apapa Wharf and Ibru Jetty Complex, Lagos.