Nigeria’s Dangote Petroleum Refinery is targeting an October initial public offering as it seeks to increase Nigerian investor participation, broaden local ownership and raise funds to support its expansion plans.
Chief Executive Officer David Bird said the planned IPO would give more Nigerians an opportunity to invest in the refinery while providing additional capital for its growth.
The refinery has applied to Nigeria’s Securities and Exchange Commission to raise as much as $5 billion through the share sale, according to a person familiar with the matter. However, the final size of the offering has yet to be determined.
Bird said Dangote Refinery does not plan to pursue an overseas listing for at least three years, as the company wants to establish a longer track record of production and financial performance before seeking international investors.
London has previously been identified as a potential destination for a future foreign listing, which the company believes could help secure a stronger valuation.
Bird declined to disclose the expected size of the IPO or the refinery’s current valuation. The company could also take into account the $2.5 billion raised through a private placement in July, which valued the refinery at about $40 billion.
Owned by Africa’s richest man, Aliko Dangote, the refinery has benefited from disruptions in global fuel markets linked to the conflict involving Iran, increasing its sales of jet fuel across Africa and into Western Europe as buyers seek alternative sources of supply.
Bird said the refinery became Europe’s largest supplier of jet fuel in June and July, underscoring its growing presence in international energy markets.
He said preparations for the IPO were progressing as planned, with strong investor interest recorded during pre-marketing activities and the July private placement.
Africa Finance Corporation led a group of strategic investors in the private placement, which was 3.7 times oversubscribed and attracted significant demand from African and international institutional investors.
Bird also said the refinery compares favourably with refining facilities in the United States because of its access to local crude supplies, strong domestic demand and integrated operations.
The company plans to increase its refining capacity to 1.4 million barrels per day within three years. The expansion is expected to be financed partly through proceeds from the IPO and additional debt.
Bird said the planned expansion would cost substantially less than the roughly $20 billion spent to construct the existing refinery.
He added that Africa’s persistent shortage of refined petroleum products and petrochemicals provides significant room for the refinery to expand its operations and strengthen its position in regional markets.
The Dangote Refinery currently supplies a significant share of Nigeria’s gasoline and diesel demand and meets the country’s jet fuel requirements.
The planned IPO would mark a major step in the refinery’s effort to deepen Nigerian participation in its ownership while providing additional funding for its next phase of expansion.
Goodness Anunobi
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