Nigeria's Dangote refinery aims to raise $5 billion with October IPO listing
Nigeria's Dangote oil refinery is set for Africa's biggest ever market listing as it seeks to raise about $5 billion through an initial public offering expected to conclude in October.
Majority owned by Aliko Dangote, the refinery emerged as a big winner from the Iran war by selling jet fuel across Africa and to western Europe as countries battled shortages.
Dangote now plans to raise funds to expand the capacity of the 650,000-barrel-per-day Lagos-based refinery and replicate its success with a similar facility in Kenya.
His ambition is to reduce Africa's dependence on expensive, imported fuels and even turn the continent into an exporter.
The planned IPO, whose proposed timeline is fairly tight according to the source, has attracted interest across the continent. Stock exchanges in South Africa, Kenya, Egypt, Ghana and Rwanda have held a series of meetings with the refinery's advisers in recent months to take part in the deal.
Kenya's capital markets could raise as much as $500 million of the Dangote IPO target, the source said, adding that there is "tremendous" appetite for the issue among local investors such as pension funds.
A second source with direct knowledge of the deal said Dangote Petroleum Refinery & Petrochemicals FZE, which has submitted its IPO application to Nigeria's Securities and Exchange Commission, is expected to receive approval in the coming weeks and be able to publish a prospectus in September.
The first source said the IPO's target was $5 billion but cautioned that the final figure would depend on what the Nigerian regulator approved as the primary listing will be on the Nigerian Stock Exchange.
That target would account for just over 4% of Nigeria's main All Share Index, whose total capitalization stood at $116 billion on Tuesday.
$40 B valuation looks ambitious. The source did not have information on how big a stake would be offered to the public or the potential valuation. However, a $2.5 billion private placement for a 6% stake in the refinery last month gave the business a valuation of around $40 billion, the second source with knowledge of that deal said.
Such a valuation looks ambitious based on the value of other stand-alone oil refiners. Turkey's Tupras, which has the same capacity as Dangote across four refineries, has a market value of just $12 billion.
HF Sinclair DINO.N, listed in New York, has a capacity of 678,000 bpd and a market capitalization of $16 billion.
Both sources spoke on condition of anonymity because the deal is confidential.
The Nigerian Stock Exchange has a minimum free float of 20% on its main board. However there have been exceptions to that rule. The free float for Dangote Cement, another business in Dangote's industrial empire, is just over 12.7%.
The first source said that other capital markets on the continent that want a slice of the deal will have to craft "structured solutions" for their investors, such as global depositary receipts, or exchange-traded instruments, which mirror the actual shares to be listed on the Nigerian exchange, including the right to accrue future dividends.
A cross-listing, or dual listing, of the shares in other regional markets is not planned at this stage, the source said. The Dangote refinery, which cost around $20 billion, started operations in 2024 before attaining full capacity earlier this year. Nigeria's state oil firm NNPC has a stake of just over 7% in it.
Aliko Dangote, 69, said in April the refinery was aiming to raise its output to 1.4 million barrels per day.
Comments