Dangote refinery targets record $5bn IPO in Africa
Nigeria’s Dangote oil refinery is preparing for what could become Africa’s largest-ever stock market listing, with plans to raise about $5 billion through an initial public offering (IPO) expected to be completed in October, according to a source familiar with the deal.
The refinery, majority-owned by Africa’s richest man, Aliko Dangote, has benefited from increased demand for fuel during the Iran war, supplying jet fuel to markets across Africa and Western Europe amid shortages.
Dangote intends to use the funds raised to increase the capacity of the 650,000-barrel-per-day refinery in Lagos and support plans to develop a similar facility in Kenya.
The businessman has said his broader goal is to reduce Africa’s reliance on costly imported fuel and eventually position the continent as a net exporter.
The proposed IPO has generated interest from several African markets. Stock exchanges in South Africa, Kenya, Egypt, Ghana and Rwanda have reportedly held discussions with the refinery’s advisers about participating in the offering.
Kenya’s capital market could potentially account for up to $500 million of the targeted amount, with strong interest reportedly coming from domestic investors, including pension funds.
A second source familiar with the transaction said Dangote Petroleum Refinery & Petrochemicals FZE has submitted its IPO application to Nigeria’s Securities and Exchange Commission. Approval is expected in the coming weeks, allowing the company to issue a prospectus in September.
Although the fundraising target is around $5 billion, the final amount will depend on the Nigerian regulator’s approval, as the primary listing is expected to take place on the Nigerian Stock Exchange.
The proposed fundraising would be equivalent to slightly more than 4% of the Nigerian All Share Index, whose total market capitalisation was about $116 billion on Tuesday.
$40bn Valuation Seen as Ambitious
The sources did not disclose how much of the refinery would be offered to investors or its expected valuation. However, a $2.5 billion private placement last month for a 6% stake valued the refinery at roughly $40 billion, according to one source familiar with that transaction.
Such a valuation could prove difficult to justify when compared with other publicly traded standalone refiners. Turkey’s Tupras, which has a combined capacity similar to Dangote’s across four refineries, has a market value of about $12 billion, while U.S.-listed HF Sinclair has a refining capacity of 678,000 barrels per day and a market capitalisation of around $16 billion.
Both sources spoke anonymously because the transaction remains confidential. Dangote did not immediately respond to a request for comment.
Nigeria’s main stock exchange generally requires companies to maintain a public free float of at least 20%, although exceptions have been made. Dangote Cement, another company within Dangote’s business empire, currently has a free float of just over 12.7%.
According to one source, other African capital markets seeking to participate in the offering would need to develop structured investment options, such as global depositary receipts or exchange-traded instruments. These would represent shares listed on the Nigerian exchange and provide investors with rights to future dividends.
A dual or cross-listing of the refinery’s shares on other African exchanges is not currently planned.
The refinery, which cost approximately $20 billion to build, began operations in 2024 and reached full production capacity earlier this year. Nigeria’s state-owned oil company, NNPC, owns slightly more than 7% of the facility.
Dangote, 69, said in April that the refinery was targeting an eventual production capacity of 1.4 million barrels per day.
Dangote’s Pan-African Ambition
With an estimated fortune of between $31 billion and $35 billion, Dangote controls a diversified conglomerate with interests in cement, sugar, salt, as well as vehicle and truck assembly operations across more than a dozen African countries.
He wants the refinery’s IPO to become a pan-African investment opportunity, reflecting his broader vision of encouraging African capital to support the continent’s development.
The source said the objective was to give investors across African capital markets an opportunity to invest in an “African champion.”
Details on whether regional exchanges will receive allocations in advance, participate through underwriting arrangements or join an open offer whose allocations would depend on overall investor demand will be determined later.
Dangote has frequently highlighted his decision to keep much of his wealth and business interests in Nigeria rather than moving his assets offshore.
He is also planning to build a refinery along Kenya’s coast in partnership with East African governments, although it remains unclear whether proceeds from the IPO will be used to finance that project.
Investors in the IPO are expected to have the option of receiving returns in either Nigerian naira or U.S. dollars, according to one source.
Source: Reuters
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