Nigerian oil refinery launches possible largest IPO in Africa
LAGOS — Nigerian billionaire Aliko Dangote on Monday launched what is slated as Africa's biggest initial public offering (IPO), which aims to raise US$1.6 billion to expand his mega oil refinery to become the world's largest.
Aliko Dangote, Africa's wealthiest individual, initiated the opening bell on the floor of Nigeria's Lagos Stock Exchange, heralding what is being hailed as Africa's largest initial public offering (IPO). The mammoth offer, valued at $50 billion and valued at $20 billion, is being driven by the company's ambitious plan to be the leading fuel supplier to the continent's 1.5 billion inhabitants.
Dangote's Dangote Refinery, situated on swamp land on Lagos' outskirts, is the fourth Dangote Industries subsidiary to go public in Nigeria. Upon completion of the initial offer next month, the company anticipates raising more than $4 billion, which would place its valuation at the upper end of estimates. If demand meets projections, shares of the refinery are set to account for up to 40% of the Lagos exchange's capitalization when they commence trading in November.
Dangote pledged to distribute the company's profits among its shareholders and ensure that its success benefits the populace. The refinery, when operational, is expected to generate approximately 40% of the Lagos exchange's total market value. Dangote also declared his intention to list every company within his conglomerate on the stock exchange.
The primary objective of the IPO is to fund a $14 billion project aimed at doubling the refinery's output, rendering it the world's largest by early 2029. If successful, this would provide a platform for a secondary listing on a global exchange.
Fuel consumption in Nigeria has risen by an average of 7.5% annually since the refinery's inception, despite raising fuel prices following the removal of government subsidies. Dangote forecasts that the refinery's revenue will reach $28 billion by the year-end, more than doubling the previous year's earnings. This growth trajectory is underpinned by Nigeria's 220 million population and the rapid pace of urbanization.
The company's long-term strategy extends beyond Nigeria, targeting other African markets with historically low fuel import dependency, such as Senegal and Namibia.
However, ensuring a steady supply of crude oil remains a challenge. Dangote has bought crude from several African nations, including Angola, Cameroon, Ghana, and Senegal, and recently purchased two cargoes from the UAE, marking its first foray into Middle Eastern crude supply. To mitigate reliance on Nigerian crude, Dangote plans to diversify its feedstock sources globally.
Written by urgent.news from Semafor's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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