By Fikayo Owoeye – Nairametrics
Ibeto Cement Company Limited has reportedly executed a Milost Equity Subscription Agreement (MESA) with Milost Global Inc. The binding agreement for a $850 million financing, of which $500 million is in equity and $350 million debt. The cement company has also started the process of going public with a reverse merger in the United States as efforts to become a publicly traded company.
This is not the first time Milost is announcing a mega equity deal with a Nigerian entity. It recently announced similar deals with Unity bank, Japaul and Aso Savings, all of which fell through. Nigeria’s Security and Exchange Commission also said they are investigating Milost.
What a reverse merger means?
A reverse merger also called reverse takeover or reverse IPO is another way for a private company to go public. It’s typically through a simpler, shorter, and less expensive process than that of a conventional initial public offering (IPO). The private company buys enough shares to control a publicly traded company. The private company’s shareholders then use its shares in the private company to exchange for shares in the public company.
According to reports circulated by an online media outfit Globe Newswire, Chief Cletus Ibeto, the billionaire owner of the Ibeto Group, will personally consummate the acquisition of a US 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.
How does Ibeto benefit?
Assuming this deal goes through, which we doubt, the agreement 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. The cement company also plans to grow the company beyond West Africa through the acquisition of other profitable cement businesses outside Nigeria within the next 12 months, this will be done at the back for the development of the two new plants.
Recall that Ibeto cement re-acquired a 60% stake in Nigeria Cement Company Plc, NigerCem from Eastern Bulkcem, but the firm was mired in legal disputes with the host community where the cement factory is located since 2012. However, with the resolution of the dispute in mid-2016, Ibeto now has access to NigerCem facilities which is located in Ebonyi State.
Previous Milost Deals in Nigeria that fell through
Milost Global Inc. has been involved in several unsuccessful bids to take over some Nigerian companies, recently, Japaul Oil and Maritime Services Plc allegedly signed a $350 million financing agreement with Milost Global Incorporated. The oil company, however, pulled out of the agreement citing some red flags in the agreement.
Milost also signified its intentions to conclude its acquisition of Nigeria’s Unity Bank. Milost Global later released a statement terminating the planned $1 billion investment in the bank citing what it termed threat emails from an unnamed individual.
Ibeto Cement Company Limited, is a privately held company incorporated under Nigerian law, is one of the most dominant players in the fast-growing cement industry in Nigeria and, by extension, Africa. It is currently developing two cement plants in Nigeria: one in Ebonyi State and one in Cross River State/Abia State.
Milost Global Inc. is an American Private Equity firm that is headquartered in New York City, with more than $25 billion in committed capital. The firm has investments across several industries including Technology, Transport, Cannabis, Education, Distribution, Mining, Oil & Gas, Financial Services, Healthcare, Pharmaceuticals, Real Estate, Alternative Energy and Infrastructure Development.