Dangote Petroleum Refinery and Petrochemicals FZE is preparing for Africa's largest initial public offering, aiming to raise $1.6 billion. The company plans to sell 4.1 billion shares at 525 naira ($0.40) each, with the IPO scheduled to open on September 14. Nigeria's Securities and Exchange Commission approved the sale, which could potentially raise about 2.15 trillion naira ($1.63 billion) if fully subscribed.
The refinery, built at a cost of approximately $20 billion, has a capacity of 650,000 barrels per day, with plans to double this to 1.4 million barrels per day. The IPO proceeds are intended to fund this expansion. A private placement in July indicated a valuation of $40 billion for the refinery, while the SEC registered the existing 120.13 billion ordinary shares, implying a valuation of about $47 billion.
This listing is expected to significantly impact Nigeria's capital market, potentially increasing the Nigerian Exchange Limited (NGX) capitalization above 200 trillion naira. Analysts estimate the refinery could account for roughly a quarter of the exchange's total capitalization. The IPO has attracted interest from various investors, including prominent figures like Femi Otedola, as well as domestic institutional investors, retail investors, and international funds.
However, some analysts and investors have questioned the valuation, noting that comparable refineries like Turkey's Tupras (with similar capacity) have a market value of about $12 billion, and New York-listed HF Sinclair (678,000 bpd capacity) is valued at about $16 billion. Despite these concerns, Aliko Dangote, Africa's richest man, aims to transform the refinery into one of the continent's largest companies, targeting over $12 billion in earnings before interest, tax, depreciation, and amortization. He has expressed a desire for investors across Africa, including Nigerian retail investors, to participate in the offering.
Investors are advised to be cautious, as the number of shares available to the public (10% of the company) could be relatively small compared to expected demand, making individual allocations highly competitive. The company has also secured a $400 million underwriting commitment for the IPO and may include a greenshoe option to sell up to 15% more shares if demand exceeds supply.
