Dangote Refinery IPO targets 10 million customers

Dangote Petroleum Refinery and Petrochemicals is targeting 10 million retail investors for its N2.15tn initial public offering, a move transaction advisors say will be about 20 times Nigeria’s current retail participation record.

The offer, consisting of 4.1 billion ordinary shares priced at $0.000013 each at N525 per share, will open on September 14 and close on October 14, ahead of a planned listing on the main board of the Nigerian Exchange in November.

The disclosure was made on Monday in Lagos at an IPO signing ceremony, where transaction advisers said the offering was structured to accommodate the mass participation of retail investors.

With a minimum order of 10 shares, investors will be able to participate with N5,250, giving low-income earners the opportunity to become shareholders.

Managing Director of Vetiva Capital Management Limited, Chuka Eseka, said the distribution structure would be driven electronically through banks, fintech platforms, stockbrokers and other financial intermediaries.

He said this arrangement would enable Nigerians to subscribe without having to be physically present, and described it as a new approach to the distribution of capital market offerings in the country.

“This will be the first offering in Nigeria that will be made available to people who actually have to subscribe digitally, utilizing a variety of platforms involving banks, fintechs, regular and significant markets and other financial intermediaries,” Eseka said.

According to him, the structure is deliberately designed so that investors can participate from wherever they are with just N5,250. The target of 10 million investors represents a significant increase from the current retail participation record of 131,000 investors cited by advisors.

Eseka said that this signing ceremony marked the commitment of the board, management and transacting parties to accountability, openness and transparency.

“The significance of this event is the commitment of the board, management and all transactional parties to the core goals of accountability, openness and transparency,” he said.

Dangote Group President Aliko Dangote said the broad investor target was the main reason for limiting the size of the offering, and stressed that fundraising was not the main objective of the IPO.

“So this is not about raising funds. If we want to raise funds, we know how to raise funds and that’s why we have limits. If not, we will actually offer 20 percent of the company shares,” he said.

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Dangote said the IPO is designed to expand ownership of the refinery beyond institutional and wealthy investors and bring ordinary Nigerians, workers, drivers, managers and small business owners into its ownership structure.

“We are targeting 10 million shareholders from across Africa and perhaps other parts of the world,” Dangote said.

He added that the aim is to provide ordinary investors with the opportunity to build long-term wealth by owning shares in major companies in Africa.

The offer also contains a retail investor incentive scheme under which eligible investors can receive up to two additional shares, subject to a specified holding period.

But Dangote said the IPO was not driven by the current geopolitical disruption or improving refining margins, noting that the company’s calculations were based on normal market conditions.

Managing Director of Vetiva Advisory Services Limited, Olutade Olaegbe, said the transaction was a fixed price offer, with retail participation conducted strictly through electronic channels.

He said investors can subscribe through the apps of participating banks, certain fintech platforms and stockbrokers, while eligible institutional investors can also subscribe electronically or through the application process provided in the offering documents.

Olaegbe disclosed that the offer has an oversubscription provision that allows the issuer to receive up to an additional 30 percent of the offer amount, depending on demand and subject to the terms of the offer.

The N2.15tn offer was primarily intended to support the refinery’s capital expenditure program, although the company said its expansion plans were fully funded.

Dangote Refinery Chief Executive Officer, David Bird, said plans to increase the refinery’s capacity from 700,000 barrels per day to 1.4 million barrels per day have been fully funded, engineered and procured, with a target completion date of 2028.

He said the expansion would also involve increasing the refinery’s product range and building distribution infrastructure to other West African markets.

“This is not just a refinery and petrochemical complex. This is truly a pan-African energy platform,” he said.

Bird also revealed that the refinery previously asked for $1 billion from private investors and received a request for $3.7 billion, ultimately receiving $2.5 billion and returning $1.2 billion.

He added that the experience strengthened the level of interest in the refinery, while emphasizing that the public offering was aimed at expanding ownership.

Stanbic IBTC Capital Limited Chief Executive Officer, Sotubo Oladele, said the next test will be whether the market can deliver the targeted number of investors when the offer opens.

The advisors also disclosed that the transaction had received sharia compliance certification following an independent assessment of the refinery’s activities and products against applicable Islamic financial standards.

They say the certification will make the offering accessible to investors seeking sharia-compliant investments.