Dangote Refinery Begins $1.6 Billion IPO for Investors

Dangote Refinery will open the order book for its $1.6 billion initial public offering (IPO) on Monday. This marks the start of a capital-raising plan targeting retail investors across Africa.

The share sale will last for a month. They plan to sell 4.1 billion shares at N525 ($0.000013) each. The sale runs until 13 October, with a listing set for November, as stated in the offer prospectus.

Vetiva Advisory Services is the lead issuing house. Other joint issuing houses include First Cap, Chapel Hill Denham, Absa Capital Markets, Afrinvest Capital, and Stanbic IBTC Capital.

The refinery is the biggest project of Africa’s richest man, Aliko Dangote. It currently processes 700,000 barrels of oil per day. Dangote plans to double this capacity by 2030, using money from the IPO to fund the expansion.

Dangote aims to add ten million African retail investors to its shareholder base. This includes cooks, drivers, traders, and managers. He shared this goal last week with investment bankers and the public during the signing of the offer documents in Lagos.

The minimum subscription is just 10 units, which costs N5,250. There is also a green shoe option that allows underwriters to sell an extra 30 percent of the shares if the offer is oversubscribed.

In July, a private placement before the IPO was 270 percent oversubscribed. The initial goal for that placement was to raise $2.5 billion.

Big institutional investors, like the UAE’s Abu Dhabi National Oil Company, have shown interest in the mega refinery. This refinery is also looking to build a similar plant in Lamu, Kenya.

Pan-African Refinery Investment SPV, a part of Lilium Capital Group, backed and funded $600 million of the private placement.

The groundbreaking for the Lamu project is set for 30 September. This project aims to meet the fuel needs of the East African region.

Dangote Refinery reported N19.1 trillion in turnover in the first half of this year. This comes from a boom due to rising oil prices linked to the US/Iran war, which is generating big profits for oil and gas companies around the world.

The profit after tax for that period was N2.5 trillion. The company is planning a cross-border listing on the Johannesburg Stock Exchange, which is the largest stock market in Africa. They are also looking into listing in Egypt, Kenya, Ghana, and Rwanda.

The IPO requires a valid bank verification number to validate applications submitted electronically.

To promote inclusiveness, shares can also be bought through approved POS stations and apps run by stockbroking firms.

Mr. Dangote, whose business includes cement, sugar, and salt production, has often said he wants to industrialize Africa. He sees great potential in the African Continental Free Trade Area.