KEY POINTS
- Dangote Refinery plans an October IPO that could raise up to $5 billion and encourage Nigerians to own shares in the company.
- The refinery plans to increase capacity to 1.4 million barrels per day within three years using IPO proceeds and debt.
- Dangote is delaying any foreign listing for at least three years while it builds a stronger record of production and financial performance..
Nigeria’s Dangote Petroleum Refinery is preparing for a major initial public offering, IPO, in October, with the company positioning the planned share sale as an opportunity for Nigerians and African investors to participate in the refinery’s expansion.
The IPO could become the largest in Africa if the proposed transaction reaches its expected scale. However, the refinery does not plan to seek an international stock market listing immediately, with management saying it wants to establish a longer record of production and financial performance before considering an overseas listing.
Dangote Refinery Chief Executive Officer, David Bird, said the primary objective of the IPO is to encourage broad participation and allow Nigerians to benefit from the company’s growth.
According to Bird, the offering was conceived as a “people’s IPO”, reflecting the company’s intention to make the share sale accessible to domestic investors.
The refinery has submitted an application to Nigeria’s Securities and Exchange Commission for a proposed $5 billion IPO, according to a source familiar with the process. However, the final size of the offering has not yet been determined.
Bird declined to disclose the refinery’s expected valuation or confirm the final amount that will be raised. Despite the potential size of the IPO, Dangote Refinery is not planning an immediate foreign stock market listing.
Bird said the company wants at least three years of established production and financial performance before considering an overseas listing.
The additional operating history could help the company demonstrate stronger financial performance and potentially secure a better valuation when it eventually seeks access to international capital markets.
London has been mentioned as a possible destination for a future foreign listing, although no final decision has been announced.
July private placement strengthens investor confidence
The proposed IPO follows a $2.5 billion private placement completed in July. The transaction reportedly valued Dangote Refinery at approximately $40 billion and attracted significant interest from investors.
Africa Finance Corporation said it led a group of strategic investors in the private placement, which was reportedly 3.7 times oversubscribed.
The strong demand came from both African and international institutional investors, providing an indication of the level of interest surrounding the refinery and its future expansion plans.
The private placement could also provide a reference point for the eventual IPO valuation, although the company has not confirmed how the transaction will affect the final pricing of the public offering. The refinery has become an increasingly important supplier of refined petroleum products in Africa and international markets.
Its performance has been boosted by disruptions in global energy markets linked to the Iran war, which have encouraged buyers to seek alternative sources of refined products.
According to Bird, Dangote Refinery became Europe’s largest supplier of jet fuel in June and July. The refinery has also been supplying jet fuel to several African markets and Western Europe, strengthening its position as an emerging international fuel supplier.
The development marks a significant shift for Nigeria, which has historically depended heavily on imported refined petroleum products despite its status as one of Africa’s major crude oil producers.
Dangote Refinery is also preparing for a major expansion.The company plans to increase its refining capacity from the current level to 1.4 million barrels per day within three years.
The expansion is expected to be financed through a combination of IPO proceeds and debt. Bird said the additional capacity would cost significantly less than the approximately $20 billion spent to build the original refinery.
The expansion would further increase the refinery’s ability to process Nigerian crude and supply refined petroleum products to domestic and international markets.
