Nigeria’s Dangote Petroleum Refinery is targeting 10 million retail investors for its planned initial public offering, Chief Executive David Bird said on Tuesday.
Bird said the refinery was using Saudi Aramco’s listing as a benchmark for the IPO and expected to “smash that” target.
READ: Honeywell to help build Dangote’s new Kenyan mega-refinery
Aliko Dangote last month said that investor demand for his ongoing Lagos refinery share sale was “enormous”, as the Nigerian pressed ahead with plans for a $16-billion refinery in Kenya that would extend his energy empire across Africa.
Dangote, Africa’s richest man, earlier this month launched a $1.6-billion initial public offering in the refinery to fund a doubling of its capacity to 1.4 million barrels per day. The deal is being marketed as a “people’s IPO” and would be Africa’s largest.
“Demand is there, enormous demand. In fact, I didn’t know the depth of our capital markets until now, really, because we have never tested it,” he told reporters in Nairobi.
He did not provide specific investor demand figures for the offer, which is scheduled to close on October 13.
The deal, which is underwritten for $400-million by Dangote‘s lead financial advisers, could raise as much as $2.1-billion if oversubscribed.
Strong demand has temporarily disrupted some financial technology platforms as investors rushed to buy into the refinery, which is widely viewed as a bet on Africa’s need for greater refining capacity.
“We expected a wave of retail demand in the IPO, but in reality, it’s been more like a tsunami,” Richmond Bassey, chief executive of Nigerian financial technology platform Bamboo, which focuses on retail investors, told Reuters.
The platform registered a 350% surge in new accounts in the week before the IPO opened, a rate that was surpassed after the offer launched, he said.
Dangote to replicate Lagos facility in Kenya
Construction of a 700,000 barrel-per-day refinery for the East African market, in which regional governments have been offered a 30% stake, is due to begin on Wednesday.
The refinery near Kenya’s second deep-water port of Lamu on the country’s North coast is expected to cost $16 billion, Dangote said.
Dangote said governments investing in the project, including Kenya and Rwanda, would be allowed to spread payments for their equity stakes over four years.
“We have made it very simple and easy for them to fund their own equity. They are not putting their equity in one day,” he said, adding Rwanda had sought a 10% stake, a request that is being discussed.
More countries express appetite for investment
Other countries besides Kenya and Rwanda have also expressed interest in investing in the refinery, Dangote said, without naming them.
The Lamu refinery will source crude from regional producers, including Kenya, which is racing to begin oil production from its own deposits, as well as from overseas suppliers in the Middle East and the United States, Dangote said.
“You don’t go and build a refinery for only one source of crude. You take different types: Middle Eastern crude, American, WTI, so you mix them up,” he said.
READ: Dangote IPO puts African capital to the test
The facility will also spur industries such as petrochemicals, Dangote said, adding pipelines would be built from the Lamu refinery into one or two countries in the region.
He dismissed criticism of the project, including from conservationists and a group of local residents who have challenged it at Kenya’s High Court, saying opposition was driven by traders whose businesses would be disrupted by the refinery.
“Everybody is saying that ‘no, we have a way that we used to make money without working hard.’ But right now, they will make money still, but they have to work hard,” he said.
- Dangote Petroleum Refinery aims to attract 10 million retail investors in its initial public offering, with CEO David Bird expecting to exceed Saudi Aramco's IPO target.
- Aliko Dangote launched a $1.6-billion IPO to fund doubling the Lagos refinery's capacity to 1.4 million barrels per day, with the deal potentially raising up to $2.1 billion if oversubscribed.
- Construction of a 700,000 barrel-per-day refinery near Lamu, Kenya, is set to begin soon, with regional governments offered a 30% stake and allowed to spread payments over four years.
- The Lamu refinery will source crude from multiple suppliers, including Kenya, the Middle East, and the United States, and plans to build pipelines into neighboring countries.
- Other countries beyond Kenya and Rwanda have shown interest in investing in the Kenyan refinery project, though specific nations were not named.
