Billionaire Dangote has launched the 'people's IPO' for Africa's largest oil refinery

Nigerian billionaire Aliko Dangote launched Africa's largest share sale on Monday with the initial public offering of his oil refinery, aiming to raise up to $2.1 billion for its expansion by targeting the general public.

Dangote, Africa's wealthiest individual, has promoted the offering of approximately a 3% stake as a "people's IPO," emphasizing that it aims to provide everyday Nigerians the chance to engage in the success of the plant.

The refinery has experienced advantages due to heightened demand for its products, stemming from supply disruptions associated with the Iran war, which facilitated its sales of jet fuel to Western European nations.

Dangote stated on Monday that the purpose of the share sale was to "democratize wealth creation.

However, retail investors will be paying a higher price than institutional investors who participated in a July private placement that raised $2.5 billion for a 6% stake.

The private placement valued the company at $40 billion, while the IPO brings the valuation nearer to $49 billion, as stated in the company prospectus.

The refinery's CEO David Bird informed Reuters that the discount on the private placement was attributed to specific conditions, including a lockup period that institutional investors consented to.

Dangote has stated that the United Arab Emirates' state oil company ADNOC (ADNOC.UL) expressed interest in investing in the plant, along with other parties, but refrained from providing further details due to non-disclosure agreements.
The Africa Finance Corporation, a participant in the private placement, noted that additional investors included sovereign wealth funds and various development finance institutions.

Minimal investment requirement

If fully subscribed, the IPO on Nigeria's main stock exchange would raise 2.15 trillion naira ($1.6 billion). However, this amount could increase to approximately $2.1 billion if the offer is oversubscribed and the company opts to utilize a greenshoe option to issue additional shares.

Individuals have the opportunity to engage in the IPO by purchasing a minimum of 10 shares through fintech and various digital investment platforms, resulting in a minimum investment of approximately $4.

That is comparatively low when considering numerous IPOs by major companies in Nigeria.
In 2021, telecoms firm MTN Nigeria presented an opportunity for retail investors with a minimum investment amount of approximately $8, based on the exchange rate at that time.

Nigerian investment app Bamboo reported that it was experiencing significantly increased traffic due to the Dangote refinery IPO, which was causing login issues for some users.

Chris Chijioke, a business owner located in Lagos, the nation's commercial hub, informed Reuters that he intends to purchase 2,000 shares, even though he has reservations regarding the sale price, as he believes that Dangote's history supports a compelling argument.

Dangote announced at a Nigerian stock exchange event on Monday that he intends to list every company eventually within his business conglomerate, which stands as one of Africa's largest industrial groups, with operations that include cement, sugar, and salt.

He mentioned that a secondary listing of the oil refinery business in the United States could occur in three to four years.

Transforming Nigeria's fuel market

Constructed at an expense of approximately $20 billion on the periphery of Lagos, the refinery has transformed Nigeria's fuel market since it commenced operations in 2024.

It processes 700,000 barrels of crude daily and aims to double that to 1.4 million barrels by 2029. The refinery has changed Nigeria’s economy from being a net importer to a net exporter of refined petroleum products, establishing itself as a crucial institution for the nation, according to analysts at Renaissance Capital Africa in a note.

Charles Robertson, head of macro strategy at FIM Partners, remarked that the share sale was a significant moment for Nigeria, reflecting the spirit of African self-reliance. "Nigerian equities have surged due to retail interest since 2024, and there is clear enthusiasm among domestic investors," he noted.