KEY POINTS
- AFC has invested in Dangote Refinery’s $2.5 billion private placement after recovering its earlier $300 million project loan.
- The refinery plans to use the fresh equity capital to strengthen its finances and support expansion from 650,000 barrels per day to 1.4 million barrels per day by 2028.
- The transaction deepens AFC’s long-term involvement in Dangote’s industrial projects and broadens the refinery’s institutional investor base.
Africa Finance Corporation, AFC, has invested in Dangote Petroleum Refinery’s $2.5 billion private placement, deepening its financial relationship with the Nigerian energy company after the full repayment of a $300 million loan previously provided to support the development of the refinery.
The investment marks a shift in AFC’s involvement with the Dangote refinery, moving from its earlier role as a lender and project financier to becoming an equity investor as the refinery enters a new phase of expansion.
AFC said it led a group of strategic investors that participated in the refinery’s first equity capital raise involving investors outside its legacy ownership structure.
The private placement raised approximately $2.5 billion through the issuance and allocation of new shares.
However, AFC did not disclose how much it invested, how many shares it acquired or the percentage stake it now holds in the refinery.
The $2.5 billion therefore represents the total amount raised from a wider group of investors and should not be regarded as AFC’s individual investment.
The placement attracted a broad range of investors, including international and African institutional investors, sovereign-linked investment vehicles, development finance institutions and strategic partners.
According to AFC, investor demand reached 3.7 times the initial offer size, indicating strong interest in the refinery’s expansion plans and future prospects.
AFC’s latest investment comes after Dangote Industries fully repaid a $300 million senior loan previously provided by the corporation.
The financing was part of approximately $5.6 billion in debt facilities assembled from development finance institutions, commercial banks and export credit agencies to support the development of the refinery and associated industrial infrastructure.
The AFC loan helped finance the construction of the 650,000-barrel-per-day refinery and its adjoining fertiliser plant at the Lekki Free Zone in Lagos.
The repayment means AFC has recovered the original project financing while maintaining exposure to the refinery through its new equity investment.
The corporation also previously served as a co-coordinating bank on a $3 billion syndicated loan for the refinery.
In 2024, AFC partnered with Access Bank to provide the refinery’s first working-capital facility, helping to finance crude purchases during commissioning and the commencement of production.
Fresh capital to support refinery expansion
Dangote Petroleum Refinery plans to use proceeds from the latest equity placement to support expansion, strengthen its capital structure and increase financial flexibility.
The refinery currently has a nameplate capacity of 650,000 barrels per day and produces petrol, diesel, aviation fuel, liquefied petroleum gas, naphtha and other petroleum products.
The company has announced plans to more than double its processing capacity to 1.4 million barrels per day by 2028.
The additional equity capital could help finance that expansion while reducing the refinery’s reliance on additional borrowing and internally generated funds.
The investment also gives the refinery a broader institutional investor base as it continues to develop its operations and expand its position in domestic and international petroleum markets.
The private placement is separate from the refinery’s recent debt refinancing arrangements.
In March, Afreximbank announced that it had underwritten $2.5 billion of a $4 billion syndicated term loan for the refinery.
That five-year facility was designed primarily to refinance existing debt and adjust the company’s financing structure to better match its operational requirements.
Unlike the debt transaction, the latest $2.5 billion deal involved the issuance of new equity to participating investors.
The combination of equity and debt financing gives Dangote Petroleum Refinery additional financial flexibility as it pursues expansion and seeks to increase production.
