Nigerians can buy into Dangote Refinery as SEC receives $5 billion IPO application

Dangote Petroleum Refinery has submitted an application for a potential $5 billion initial public offering to Nigeria's Securities and Exchange Commission, giving Nigerians a chance to own part of the plant. The final size of the offering has not been determined, according to a source familiar with the matter who spoke to Reuters.

People's IPO

David Bird, chief executive officer of Dangote Petroleum Refinery, said the company wants the IPO to be widely accessible to Nigerians. "We really want to drive participation," Bird told Reuters, describing the proposed offering as a "people's IPO."

The plan could allow Nigerian investors to directly share in the growth of one of the country's biggest industrial projects. While international investors could eventually get access, Bird said the company does not plan to seek a foreign listing immediately. The refinery wants at least three years of demonstrated production and financial performance before considering an overseas listing.

A stronger track record, Bird said, could help the company secure a better valuation. London has been mentioned as a possible destination for a future international listing. Bird declined to disclose the refinery's valuation or confirm the final IPO size.

Investor demand and private placement

Investor appetite for the refinery is strong. The company's July private placement raised $2.5 billion and valued the refinery at approximately $40 billion. Africa Finance Corporation said it led a group of strategic investors in the round, which was reportedly 3.7 times oversubscribed.

The transaction drew significant demand from African and international institutional investors. The refinery has also benefited from disruptions in global energy markets linked to the Iran war, which increased demand for alternative supplies of refined petroleum products.

Bird said the refinery became Europe's largest supplier of jet fuel in June and July. Its products have also found markets across Africa and Western Europe.

Expansion and local advantages

Dangote Refinery is preparing a major expansion that could nearly double its current capacity. Bird confirmed plans to increase refining capacity to 1.4 million barrels per day within three years. The expansion will be funded partly through IPO proceeds and additional debt.

The new investment is expected to cost substantially less than the approximately $20 billion spent to build the original refinery. Bird said the plant has strong advantages over many US refining assets, including access to local crude supplies, robust domestic demand and an integrated operating structure.

The facility currently supplies most of Nigeria's gasoline and diesel requirements and meets the country's entire jet fuel demand. Africa still faces a structural shortage of refined petroleum products and petrochemicals, and Dangote believes there is significant room to grow.

Separately, Legit.ng earlier reported that Aliko Dangote plans to build a $16 billion oil refinery in Lamu, Kenya. Dangote said the facility would be the largest in East Africa, with a capacity of about 700,000 barrels per day, surpassing his 650,000 barrel per day Lagos refinery.

For Nigerian investors, this IPO is a rare chance to own a piece of a refinery that supplies most of the country's fuel. The planned expansion could further cut dependence on imported petroleum products and keep more value within the Nigerian economy.