EXCLUSIVE-Nigeria's Dangote refinery aims to raise $5 billion with October listing, source says

Nigeria's Dangote oil refinery is set to raise $5 billion through an initial public offering, aiming to expand its capacity and reduce Africa's dependence on imported fuels.

Nigeria's Dangote oil refinery is set for Africa's biggest ever market listing as it seeks ‌to ​raise about $5 billion through an initial public offering expected to conclude in October, a source with knowledge of the plan told Reuters.

Majority owned by Africa's richest man, Aliko Dangote, the refinery emerged as a big winner from the Iran war by selling jet fuel across Africa and to western Europe as countries battled shortages. Dangote now plans to raise funds to expand the capacity of the 650,000-barrel-per-day Lagos-based refinery and ‌replicate its success with a similar facility in Kenya.

His ambition is to reduce Africa's dependence on expensive, imported fuels and even turn the continent into an exporter. The planned IPO, whose proposed timeline is fairly tight according to the source, has attracted interest across the continent. Stock exchanges in South Africa, Kenya, Egypt, Ghana and Rwanda have held a series of meetings with the refinery's advisers in recent months to take part in the deal.

Kenya's capital markets could raise as much as $500 million of the Dangote IPO target, the source said, adding that there is "tremendous" appetite ‌for the issue among local investors such as pension funds. A second source with direct knowledge of the deal said Dangote Petroleum Refinery & Petrochemicals FZE, which has submitted its IPO application to Nigeria's Securities and Exchange Commission, is expected to receive approval in the coming weeks and ‌be able to publish a prospectus in September.

The first source said the IPO's target was $5 billion but cautioned that the final figure would depend on what the Nigerian regulator approved as the primary listing will be on the Nigerian Stock Exchange. That target would account for just over 4% of Nigeria's main All Share Index, whose total capitalisation stood at $116 billion on Tuesday.

$40 BILLION VALUATION LOOKS AMBITIOUS The source did not have information on how big a stake would be offered to the public or the potential valuation. However, a $2.5 billion private placement for a 6% stake in the refinery last month gave the business a valuation of around $40 billion, the second source with knowledge ⁠of that deal ​said.

Such a valuation looks ambitious based on the value of other stand-alone ⁠oil refiners. Turkey's Tupras, which has the same capacity as Dangote across four refineries, has a market value of just $12 billion. HF Sinclair, listed in New York, has a capacity of 678,000 bpd and a market capitalisation of $16 billion.

Both sources spoke on condition of anonymity because the deal is confidential. Dangote did not respond to a request for ⁠comment.

The Nigerian Stock Exchange has a minimum free float of 20% on its main board. However there have been exceptions to that rule. The free float for Dangote Cement, another business in Dangote's industrial empire, is just over 12.7%. The first source said that other capital markets on the continent that want a ​slice of the deal will have to craft "structured solutions" for their investors, such as global depositary receipts, or exchange-traded instruments, which mirror the actual shares to be listed on the Nigerian exchange, including the right to accrue future dividends.

A cross-listing, or ⁠dual listing, of the shares in other regional markets is not planned at this stage, the source said. The Dangote refinery, which cost around $20 billion, started operations in 2024 before attaining full capacity earlier this year. Nigeria's state oil firm NNPC has a stake of just over 7% in it. Aliko Dangote, 69, said in April the refinery was aiming ⁠to raise ​its output to 1.4 million barrels per day.

WEALTHIEST MAN IN AFRICA With an estimated net worth of between $31 billion and $35 billion, Dangote owns a conglomerate that includes production of cement, sugar and salt, and car and truck assembly plants in more than a dozen African countries.

He is keen for the IPO to be a pan-African venture, the source said, in line with his vision of helping the continent find local solutions for its development challenges. The source said the aim was to enable capital markets across the continent to participate in "an African champion".

Details ⁠of whether regional capital markets will get pre-allocations, and the possibility of underwriting, or whether they will be allowed to participate in an open offer whose allocations will be determined later based on the strength of the overall demand for the whole offering, will ⁠be worked out at a later date, the source said. Dangote often boasts of ⁠being one of the few African billionaires who have kept their vast wealth at home in Nigeria instead of stashing it in offshore accounts.

He is also planning to start the construction of a refinery along the Kenyan coast together with East African governments, but the source did not know if some of the cash to be raised from the IPO could be deployed towards that project. Dangote will offer ‌investors the option of being paid in naira ‌or dollars, the first source said.