Dangote Petroleum Refinery plans to list shares in Nigeria in October in an offering that could raise about $5 billion and become Africa's largest IPO. Chief Executive Officer David Bird said the company wants Nigerians to take part in its growth and described the planned sale as "the people's IPO." A foreign listing is not expected for at least three years.
The refinery has submitted an IPO application to Nigeria's Securities and Exchange Commission, though the final offer size has not been set. A $5 billion raise would be large for Nigeria's equity market, whose total capitalization was about $116 billion in early August. The company is expected to use part of the proceeds to fund expansion at its Lagos site.
Investor demand has already been tested. Dangote Refinery raised $2.5 billion in a July private placement led by Africa Finance Corporation. The transaction was 3.7 times subscribed and included African and international investors. The placement sold about 6% of the company and valued the refinery at around $40 billion.
The refinery has also gained from shifts in global fuel markets. It became Europe's largest supplier of jet fuel in June and July as buyers sought new sources during disruptions linked to the Iran war. The plant now supplies most of Nigeria's gasoline and diesel demand and all of its jet fuel needs.
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Dangote plans to increase refining capacity from 650,000 barrels a day to 1.4 million within three years. Bird said the expansion would cost less than the roughly $20 billion spent to build the existing refinery and would be funded through a mix of IPO proceeds and debt. The company wants at least three years of operating and financial results before considering a foreign listing, with London among the venues mentioned.
Key Takeaways
The IPO would do more than raise money for refinery expansion. It would test whether Nigeria's capital market can absorb an offering of this size. A $5 billion deal would equal more than 4% of the Nigerian equity market's capitalization in early August.
The July private placement offers one signal of demand: investors sought 3.7 times the shares available, and the transaction valued the refinery at about $40 billion. That valuation will be watched because listed refiners with similar processing capacity trade at lower market values, while Dangote argues its access to Nigerian crude, local fuel demand and integrated petrochemical operations support a different case.
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The listing could also change ownership of an asset that has become part of Nigeria's fuel system. The refinery processes up to 650,000 barrels a day and supplies most of the country's gasoline and diesel demand. If the planned expansion to 1.4 million barrels a day is completed, the business would have more capacity to serve markets outside Nigeria.
The October offer will test three things: investor appetite, the refinery's valuation and whether a Nigerian industrial company can fund its next stage through public markets rather than relying mainly on private capital and debt.
