Dangote refinery IPO draws three times target demand, sources say

Nigeria's $1.6 billion Dangote refinery initial public offering has attracted around three times the anticipated demand, according to two sources familiar with the matter. The share sale, scheduled to conclude on Tuesday, has received approximately 6.4 trillion naira ($4.78 billion) in orders from a mix of Nigerian retail and institutional investors.

Aliko Dangote, the billionaire behind the Lagos refinery, emphasized that the sale is aimed at millions of ordinary Nigerians and Africans who can purchase shares for as low as $4. The order book is anticipated to rise once subscriptions from investors in other African nations are taken into account, one source added. Dangote has already received subscriptions from over 2 million investors via digital platforms thus far.

Due to the high demand, it was anticipated that Dangote would utilize a greenshoe option, which would permit the expansion of the offering to up to $2.1 billion. A spokesperson for Dangote Petroleum Refinery and Petrochemicals FZE refrained from commenting on the demand and the potential exercise of the greenshoe option. The IPO arrives at a time when the company has benefited from improved margins, thanks to higher crude oil prices stemming from the Iran conflict, which have boosted earnings.

The refinery, which kicked off commercial operations in early 2024, has consistently increased production and expanded exports, including shipments of jet fuel to Europe and other African markets. This progress has helped solidify Nigeria's potential role as a net exporter of refined petroleum products. Share allocation is expected to commence next week, preceding the company's scheduled listing on the Nigerian Exchange in November.

The $20 billion refinery has revolutionized Nigeria's fuel market since it commenced operations, processing roughly 700,000 barrels of crude oil daily, with plans to double capacity to 1.4 million barrels per day by 2029.