Dangote Refinery IPO could add $60bn to NGX market capitalisation – Minister

The Minister of Industry, Trade and Investment, Jumoke Oduwole, has said the proposed Initial Public Offering (IPO) of Dangote Petroleum Refinery & Petrochemicals FZE could boost Nigeria’s investment and capital market sectors.

Mrs Oduwole said if fully subscribed, the offering and subsequent listing could add approximately $60 billion to the total equity market capitalisation of the Nigerian Exchange (NGX).

The minister stated this in a statement on Wednesday in support of the refinery’s IPO.

“If fully subscribed, the offering and subsequent listing could add approximately $60 billion to the total equity market capitalisation of the Nigerian Exchange (NGX), significantly expanding the size of Nigeria’s listed equity market,” she said.

The minister noted the transaction could attract new investors, broaden the range of companies listed on the exchange and demonstrate the capacity of Nigeria’s capital market to support enterprises operating at scale.

“Less than three years ago, access by Free Zone Entities to Nigeria’s capital market was a live regulatory constraint being raised directly by investors. Today, a Free Zone Entity operating from Nigeria has launched Africa’s largest-ever IPO.

“This is translating into investment, and it is precisely the kind of reform-to-investment conversion we want to institutionalize,” Mrs Oduwole said.

She recalled that the issue of access to the capital market by Free Zone Entities had been raised during engagements with private-sector operators, including Dangote Refinery and other Free Zone operators.

Mrs Oduwole urged investors to contribute to Nigeria’s economic development, saying the country’s business environment was becoming more conducive to investment.

“Our ambition is not merely to attract capital, but to shape an environment in which capital can land, grow and create lasting value. Our message to domestic and global investors is clear: Nigeria is a market where you can build at scale, mobilise capital at scale and compete globally.

“We will continue to deepen the reforms necessary to unlock productive investment and connect Nigerian enterprise and production more competitively to African and global markets,” she said.

Dangote Refinery IPO

The Dangote Petroleum Refinery and Petrochemicals FZE plan to raise capital from the public through an Initial Public Offering (IPO) after its Chairman, Aliko Dangote, announced plans to list the refinery and widened its ownership.

The company signed the IPO documents on 7 September and formally opened the public offer on 14 September. The offer comprises 4.1 billion ordinary shares at N525 per share, with the company seeking to raise about N2.15 trillion if fully subscribed. The offer is scheduled to close on 13 October.

The IPO is being presented by Mr Dangote as a way of broadening ownership of the refinery beyond its existing investors. At the launch, he said the exercise was intended to make wealth creation available to ordinary people rather than being primarily a fundraising exercise.

How the IPO works

An IPO is the process through which a privately held company offers shares to members of the public for the first time. Investors who are allotted shares become shareholders in the company and may receive dividends if the company declares them. The value of their shares can also rise or fall depending on the market and the company’s performance.

In the Dangote Refinery offer, investors can apply for a minimum of 10 shares at N525 each, meaning the minimum subscription is N5,250. Applications are to be made through Securities and Exchange Commission (SEC)-approved receiving agents and electronic application channels. After the offer closes, the applications will be processed and shares allotted in accordance with the terms of the offer.

The company is seeking to raise about N2.15 trillion through the offer. The funds are expected to support the refinery’s expansion plans, including its proposed increase in refining capacity. Reuters reported that the company plans to more than double capacity to about 1.4 million barrels per day by 2029, with the expansion estimated at $14.3 billion.

Nigerians’ reactions

The IPO has generated substantial interest among Nigerian retail investors, with several investment platforms reporting unusually heavy traffic when the offer opened.

There are reports of surge in demand overwhelming parts of Nigeria’s fintech investment infrastructure, with platforms including Bamboo, Cowrywise and InvestNaija experiencing difficulties as investors rushed to participate. Bamboo said its traffic increased sharply shortly after the offer opened.

READ ALSO: Billions of naira subscribed by investors within minutes of Dangote Refinery’s IPO opening Official

Some Nigerians have expressed excitement about the opportunity to own shares in a major Nigerian industrial company, with social media users joking about becoming “business partners” with Mr Dangote after subscribing to the offer.

However, the enthusiasm has also been accompanied by caution. The Securities and Exchange Commission has warned prospective investors to use only approved subscription channels and to verify platforms and receiving agents, amid concerns about fraudulent websites, social-media accounts and unsolicited messages targeting people interested in the IPO.