Amanze Chinonye
Nigeria’s Dangote Petroleum Refinery has secured a $1 billion underwriting programme for its planned stock market listing, in a move that could pave the way for one of Africa’s largest initial public offerings, Prime Business Africa reports.
The programme comprises a fully funded $600 million private placement and a further $400 million underwriting commitment to support the planned initial public offering, the transaction’s co-financial advisers, Marob Strategies and Consulting DIFC Ltd and Lilium Capital Group, said on Tuesday, According to Reuters.
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Dangote Refinery Targets Record $5bn IPO to Drive African Expansion
The programme was implemented through Pan-African Refinery Investment, a special-purpose vehicle and subsidiary of Lilium, the advisers said.
The $400 million underwriting commitment will become effective when the IPO is launched and is subject to regulatory approvals and market conditions.
Dangote Petroleum Refinery, majority-owned by billionaire Aliko Dangote, has applied to Nigeria’s Securities and Exchange Commission to raise about $5 billion through an IPO, according to a source familiar with the matter. The final size of the offering has not been determined.
If completed at that scale, the IPO could rank among Africa’s largest and broaden public ownership of the refinery.
“The successful completion of the private placement, together with the $400 million underwriting commitment … in support of the planned IPO, reflects confidence in the refinery’s strategic role,” Dangote said in a joint statement issued by the advisers.
The planned offering has attracted interest from African and international investors, including sovereign wealth funds, governments, institutional investors and other eligible investors, Marob Strategies and Lilium said.
The advisers said the transaction could deepen African capital markets, broaden ownership of a strategic African industrial asset and help mobilise long-term capital for industrial development.
The refinery, located in Lagos, has a stated capacity of 650,000 barrels per day. It has been ramping up production and exports of refined petroleum products, including jet fuel, to African and European markets.
The plant has become an increasingly important supplier as Nigeria seeks to reduce its reliance on imported refined petroleum products.
Dangote has also outlined plans to expand the refinery’s capacity to 1.4 million barrels per day, although the timing and financing of the expansion remain subject to the company’s investment plans.
The proposed IPO follows a $2.5 billion private placement completed in July that valued the refinery at about $40 billion. The transaction was reportedly oversubscribed, signalling strong investor demand for the asset.
The IPO is expected to list on the Nigerian market in October, subject to regulatory approval and market conditions, according to people familiar with the plans.
Kenyan institutional investors could contribute as much as $500 million to the offering, although that figure represents potential participation rather than funds already committed.
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A possible future listing on South Africa’s Johannesburg Stock Exchange has also been discussed. Dangote Refinery Chief Executive David Bird has said, however, that the company is focused on a Nigerian, retail-oriented offering and does not expect to pursue a foreign listing for at least three years.
The IPO process follows a warning from Nigeria’s SEC in June ordering capital-market operators to stop promoting or soliciting subscriptions for a purported Dangote Refinery IPO. The regulator said at the time that no IPO application had been filed or approved and warned investors against paying for purported pre-IPO allocations.
The refinery has since submitted its formal application, which the SEC is reviewing.
If approved and completed, the offering would give investors an opportunity to acquire an equity stake in one of Africa’s largest industrial projects while potentially providing Dangote Refinery with additional capital for its expansion plans.
The final size, valuation, timing and structure of the IPO remain subject to regulatory approval and market conditions.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
