Africa's richest man, Aliko Dangote, is proceeding with what is expected to be Nigeria's largest initial public offering (IPO) for his oil refinery business. The offering aims to raise $1.6 billion by selling 4.1 billion ordinary shares at N525 per share, potentially totaling N2.15 trillion if fully subscribed. This IPO has received approval from Nigeria’s Securities and Exchange Commission (SEC), which registered the refinery company’s existing 120.13 billion ordinary shares, implying a valuation of approximately $47 billion.
The capital raised from this IPO will be used to fund an ambitious expansion plan to more than double the refinery's capacity from 650,000 barrels per day to 1.4 million barrels per day. The company has already secured a $400 million underwriting commitment for the IPO, and an overallotment option allows for selling about 15% more shares if demand exceeds supply. Dangote also expressed his desire for investors from across Africa, including Nigerian retail investors, to participate in the offering.
Despite the significant valuation, some analysts and investors have questioned the proposed $47 billion valuation, especially when compared to other listed stand-alone oil refiners. For example, Turkey’s Tupras, with a similar refining capacity, has a market value of about $12 billion, and New York-listed HF Sinclair, with a capacity of about 678,000 barrels per day, is valued at approximately $16 billion. However, Dangote anticipates the refinery will generate over $12 billion in earnings before interest, tax, depreciation, and amortization, which he believes justifies the valuation.
