Nigeria’s Dangote refinery aims to raise $5 billion with October listing, source says

Nigeria's Dangote oil refinery is poised to make history as Africa's largest market listing, aiming to raise around $5 billion through an initial public offering (IPO) scheduled for October, according to sources familiar with the plan. The refinery, majority-owned by Africa's wealthiest individual, Aliko Dangote, gained prominence during the Iran war by supplying jet fuel across Africa and Western Europe amid fuel shortages.

Dangote now intends to expand the refinery's capacity from its current 650,000-barrel-per-day output in Lagos to replicate this success with a similar facility in Kenya, aiming to reduce Africa's reliance on costly imported fuels and potentially transform the continent into an exporter. The impending IPO, with a tight timeline, has garnered interest from stock exchanges in South Africa, Kenya, Egypt, Ghana, and Rwanda, which have held meetings with the refinery's advisers.

Local investors, including pension funds, show significant appetite for the deal. Dangote Petroleum Refinery & Petrochemicals FZE, which has submitted its IPO application to Nigeria's Securities and Exchange Commission, is expected to receive approval soon and publish a prospectus in September. The IPO target of $5 billion may be adjusted according to the Nigerian regulator's approval, which will account for about 4% of Nigeria's main All Share Index valued at $116 billion.

Although the potential valuation is ambitious, a $2.5 billion private placement for a 6% stake last month valued the business at approximately $40 billion. The Nigerian Stock Exchange requires a minimum free float of 20% on its main board, though exceptions exist, such as Dangote Cement's free float of over 12.7%. Other African capital markets seeking a share of the IPO will need to create structured solutions, like global depositary receipts, to mirror the shares listed on the Nigerian exchange.

Dangote aims to involve regional capital markets in this "African champion" venture, ensuring they can participate in its development despite the lack of a planned dual listing.