By ETIM ETIM
The most highly anticipated public offer in Nigeria’s capital market this year is the forthcoming IPO of Dangote Petroleum Refinery & Petrochemicals FZE (DPRP) expected to open in the last quarter of the year. Investors, analysts and capital market enthusiasts expect between three billion and ten billion ordinary shares would be offered in the IPO at a price ‘’not less than N500 per share’’, according to a capital market operator who did not want to be mentioned in this article. ‘’Even at that, it would be oversubscribed; and this is a testimony to the depth of our capital market’’, he said. Mr. Aliko Dangote, Africa’s wealthiest man and owner of the refinery, may raise over N4 trillion from the offer.
In the last capitalization exercise (March 2024-March 2026), Nigerian banks collectively raised a total of N4.65 trillion (approx. $3.4 billion) in fresh capital. Dangote himself is fond of boasting that his cement business alone pays more taxes to the Nigerian government than all the banks in the country. Now, he has something new to brag about.
The exact per-share price and volume of shares for the IPO have not yet been announced, but in a recent pre-IPO private placement, shares were priced at $0.35 per share, equating to an estimated $39 billion to $40 billion enterprise value. Between five percent and 10 per cent of DPRP’s total shares would be issued in the IPO, according to earlier public statements by Dangote himself. ‘’If we take a cue from the pricing of the private placement, it is therefore reasonable to expect the IPO to hit the market at between N350 and N500 per share’’, said a market analyst. Last week, the company announced that it had raised $2.5 billion in new equity through the private placement, which was oversubscribed by about 400 per cent. The transaction is perhaps Africa’s largest publicly disclosed primary equity private placement by value, a significant milestone in DPRP’s long-term funding strategy. Proceeds from the private placement and the forthcoming IPO will support DPRP’s ongoing expansion within and across Africa.
The company is currently doubling its current capacity of 640,000 barrels-per-day capacity in its Lagos operations and building a new 700,000-barell-per-day refinery in Lamu, a historic coastal town and island in Kenya. The $17 billion project will be located at the Lamu port area, taking advantage of its deep-water access and strategic shipping routes on the Indian Ocean. The facility is designed to serve as an industrial hub that will supply refined petroleum products to Kenya and other landlocked East African nations, including Uganda, Rwanda, South Sudan, Burundi and DRC.
Just like the private placement which attracted participation from a diverse group of African and international institutional investors, sovereign wealth funds, development finance institutions, the IPO would be offered to both individuals and institutional investors. There are plans to list the company on some international exchanges (Nigeria, London, New York) next year – the first Nigerian company to ever achieve such a milestone.
As a Nigerian, I am very proud of Aliko Dangote’s accomplishments and business acumen. Africa owes him a debt of gratitude. His refinery has saved Nigeria from what would have been an economic catastrophe arising from the conflicts in the Middle East which have driven crude oil prices to above $100 per barrel occasionally and sent pump prices northwards in many countries since February when the war broke out. If we hadn’t had Dangote Refinery, Nigerians would have suffered severe and protracted fuel shortages and sky-high pump prices of refined products, quite worse than what we had experienced.
Aliko Dangote is Africa’s answer to Dhirubhai Ambani of India who founded the Reliance group in 1966, initially as a small textile and polyester yarn business before it expanded into a massive multinational conglomerate today. Now headquartered in Mumbai, its lines of business span across energy, petrochemicals, natural gas, retail, entertainment, telecommunications, mass media and textiles. Reliance is the largest public company in India by market capitalization and the 88th biggest company worldwide. It is India’s largest private tax payer and the largest exporter, accounting for 7 per cent of India’s total merchandise exports. Mr. Dangote doesn’t need to go into media and entertainment, but I look forward to when he would go into steel development. He told a group of visiting journalists at his refinery in 2024 that steel would be his next venture. I hope he will keep his words.
If Dangote Refinery’s IPO hits the market at less than N500 per share as some analysts expect, there would be a big scramble for them. There is a strong expectation of a quick appreciation of the price on the secondary market. Currently, only seven stocks, out of the approximately 150 listed companies on NGX are traded at N100 and above. They are Nestle (N2,812.5); Presco (2,070); Aradel (N1,526); Okomu (N1,418); Dangote Cement (N1,034); Julius Berger (N310) and Nigeria Exchange Group (N149).
Nigeria needs more Dangotes – men of great courage and vision who can build conglomerates from the scratch. South Korea owes its industrialization to private investors who started small and grew their businesses into conglomerates or chaebols, as they call them. Samsung Group; Hyundai Motor Group; SK Group and LG Corporations are just few of South Korean conglomerates whose products are available in almost every home.
ETIM ETIM is a veteran journalist and PR professional with over 35 years of cognate experience.
He is the publisher and editor-in-chief of Policy & Politics (www.policyandpolitics.com.ng), an online newspaper dedicated to insightful analysis of Nigerian news and world’s report. He is also a columnist with BusinessDay and The Cable and is a regular contributor to other newspapers.
Contact: +234802 3159969 (WhatsApp Only)
