Dangote refinery IPO opens at $50bn valuation as Lamu plant nears

Moneyweb reports that Aliko Dangote opened an initial public offering for his refinery on 14 September, a listing that values Dangote Petroleum Refinery and Petrochemicals Fze at almost $50 billion and is set to raise about $1.6 billion. The item is at moneyweb.co.za.

The offer is the largest of its kind yet put to investors on the continent. Bloomberg calculations cited by Moneyweb put Dangote’s net worth at $35.3 billion before the listing, with the sale lifting it by as much as $22.9 billion to a projected $58.2 billion. That would carry him past US hedge fund manager Ken Griffin and technology billionaire Eric Schmidt on the world wealth table.

The subscription closes on 13 October, with a listing due shortly afterwards.

What is actually being sold

The refinery sits just outside Lagos and processes 700 000 barrels a day. Dangote wants to double that capacity as part of a further $14.3 billion of investment. Getting the first phase built took more than a decade and about $19 billion, including the stabilisation of swampland roughly half the size of Manhattan, new roads, a port and quays, and more than 300 cranes.

The plant reached full capacity this year. Moneyweb reports that it turned Nigeria into a net exporter of refined fuel for the first time, which means the country now sells processed product rather than shipping crude out and buying petrol and diesel back. That shift is the reason the listing has drawn attention well beyond Lagos.

The offer is pitched at retail and institutional investors with a minimum subscription of 10 shares, shariah-compliant status, and a strategy that may pay dividends in dollars.

“We, as Nigerians and Africans, must be bold and lead the change to develop our economies,” Dangote said at the IPO signing ceremony in Lagos. “Only then will the others take us very seriously, only then we’ll be in a position to negotiate and walk away with terms we deserve, not those terms that are given to us.”

The Lamu refinery, and why it matters here

The group’s next move is east. A 700 000 barrel a day refinery is planned at Lamu in Kenya, with groundbreaking expected this month and a price tag of about $16 billion. Moneyweb reports that Dangote has offered East African governments a 30% equity stake in the project.

Kenya is championing it. Rwanda and Ethiopia have shown interest. Uganda is weighing it against its own plan for a smaller refinery and an investment in a competing oil hub off Tanzania’s coast, so regional backing is not unanimous.

The Lamu site is known for marine life, mangroves and coral reefs. Greenpeace Africa has asked authorities to hold back approvals until an independent environmental and social impact assessment and a public consultation are complete.

For South African readers the interest is not only in the fuel. A listing of this size tests whether African exchanges and African capital can carry a business of world scale without leaning on London or New York to price it. Chidi Iwuchukwu, executive director of FirstRand’s RMB Nigeria, told Moneyweb that large flagship listings deepen liquidity, widen the investor base and show that African capital markets can support world-class businesses at scale. He said they also create a blueprint for other leading African companies to raise growth capital through public markets.

South Africa has its own live version of that question. The JSE remains the deepest market on the continent, and domestic plans to revive local oil refining to cut import dependence are already on the table. A successful Dangote listing strengthens the case that African industrial assets can be funded and listed at home, which is the argument South African refiners and their backers have been making to local institutions for years.

The family, and the next decade

The refinery anchors a group target of lifting revenue fivefold to $100 billion by the end of the decade, according to Fatima Dangote, the billionaire’s daughter and the group’s executive director for oil and gas. She said cement and fertiliser operations will also drive that growth.

Dangote Group already has three listed businesses, being Dangote Sugar Refinery Plc, Dangote Cement Plc and food-seasoning company NASCON Allied Industries Plc, plus a majority stake in Dangote Peugeot Automobile Nigeria and interests in shipping, power and real estate.

The expansion is running alongside a generational handover. Fatima Dangote holds the oil and gas portfolio. Mariya Dangote, the eldest, heads operations for the food businesses and leads commercial strategy at the cement unit. Halima Dangote is group executive director of the family office.

The growth has also drawn scrutiny of how much of its home market the group controls. Chibuike Uche, who holds the chair for the governance of finance and integrity in Africa at Leiden University in the Netherlands, told Moneyweb that Dangote followed a simple formula of displacing competitors by building local processing capacity for products that are too costly to import.

“I’ve never been one to say there’s a monopoly,” Uche said. “For economic advancement, one can never put the cart before the horse: the industry has to emerge first, then monopoly rules will grow from that.”

Abu Dhabi National Oil Co. is in talks with Dangote about investing in the business, according to people with knowledge of the situation cited by Moneyweb, as it looks to secure customers for its crude and expand fuel trading.

The immediate date for anyone following the offer is 13 October, when subscriptions close. The Lamu groundbreaking is expected within the month, with Greenpeace Africa’s call for a pause on approvals still before Kenyan authorities.

Source: Moneyweb. Read the original item.