Nigerian billionaire Aliko Dangote on Monday launched Africa's largest share sale yet with the initial public offering of his oil refinery, targeting the general public to raise as much as $2.1 billion for its expansion.
Dangote, Africa's richest man, has marketed the offer of a roughly 3% stake as a "people's IPO," saying it is about giving ordinary Nigerians the opportunity to participate in the success of the plant.
The refinery has benefited from increased demand for its products as a result of supply disruptions linked to the Iran war that helped it to sell jet fuel to western European countries.
However, retail investors will be paying a higher price than institutional investors who bought into a July private placement that raised $2.5 billion for a 6% stake.
That private placement valued the company at $40 billion, whereas the IPO moves the valuation closer to $49 billion, according to the company prospectus.
The refinery's CEO David Bird told Reuters the private placement's discount was due to certain conditions, including a lockup period, institutional investors agreed to.
Dangote has said United Arab Emirates state oil company ADNOC ADNOC.UL was interested in investing in the plant alongside others but declined to elaborate, citing non-disclosure agreements.
The Africa Finance Corporation, one of the institutional investors in the private placement, said others included sovereign wealth funds and other development finance institutions.
Low threshold for investment
If fully subscribed the IPO on Nigeria's main stock exchange would raise 2.15 trillion naira ($1.6 billion), though that could rise to roughly $2.1 billion if the offer is oversubscribed and the company decides to use a greenshoe option to issue more shares.
People can participate in the IPO by buying as few as 10 shares on fintech and other digital investment platforms, which translates into a minimum investment amount of about $4.
Telecoms firm MTN Nigeria's MTNN.LG offer to retail investors in 2021 had a minimum investment amount of about $8 according to the exchange rate at the time.
Nigerian investment app Bamboo said it was receiving much higher traffic than usual because of the Dangote refinery IPO, preventing some users from logging in.
Chris Chijioke, a business owner based in the country's commercial capital Lagos, told Reuters he would buy 2,000 shares despite having concerns about the sale price as he believed Dangote's track record made a strong case.
Dangote told a Nigerian stock exchange event on Monday that he eventually planned to list every company in his business conglomerate, which is one of Africa's largest industrial groups, with operations spanning cement, sugar and salt.
He also said there could be a secondary listing of the oil refinery business in the United States in three to four years' time.
Transforming Nigeria's fuel market
Built at a cost of about $20 billion on the outskirts of Lagos, the refinery has reshaped Nigeria's fuel market since it started operations in 2024.
It processes 700,000 barrels of crude a day and has a goal to increase that to 1.4 million barrels by 2029. The refinery "has transformed Nigeria’s economy from a net importer to a net exporter of refined petroleum products, making it a systemically important institution for the nation," Renaissance Capital Africa analysts said in a note.
Charles Robertson, head of macro strategy at FIM Partners, said the share sale was a huge event for Nigeria, symbolising African self-reliance.
"Nigerian equities have boomed on the back of retail interest since 2024 and there's evident excitement among domestic investors," he added.
