Domestic and retail investors have committed up to $1.6 billion to Dangote Refinery’s initial public offering (IPO), meeting its fundraising target as applications from investors in 119 countries raise the prospect of intense competition for available shares.
The strong demand is expected to push the total amount raised beyond the original target, with the refinery potentially attracting as much as $2.1 billion if it exercises its 30 per cent over-allotment option, according to a Bloomberg report published yesterday.
The report, which cited people familiar with the transaction, said domestic and retail investor commitments had reached between $1.5 billion and $1.6 billion, while international demand could exceed the shares available for allocation.
The development highlighted the capacity of domestic investors to mobilise substantial funds for a major industrial project while attracting interest from international markets.
The offer, which closed yesterday, October 27, following a two-week extension, involved the sale of 4.1 billion ordinary shares at N525 each, representing a fundraising target of approximately N2.15 trillion.
The extension was intended to give more investors, particularly those outside Nigeria, additional time to participate in the offer.
Bloomberg reported that investors from 119 countries had applied to participate, including investors from all 54 African countries. The figures underline the geographical reach of the offer, although the final number of successful investors and the allocation of shares will depend on the allotment process.
The transaction is also testing the ability of African capital markets to channel savings into major businesses across national borders. Arrangements involving depositary receipts and other approved investment channels have been used to facilitate participation by eligible investors outside Nigeria.
Africa’s richest man, Aliko Dangote, has positioned the IPO as an opportunity to widen public ownership of the refinery and bring millions of individual investors into the capital market.
The minimum subscription is 10 shares at N525 each, requiring an investment of N5,250. The entry threshold is intended to make participation accessible to ordinary Nigerians and other eligible African investors.
At the launch of the offer, Dangote said the initiative was designed to give ordinary Nigerians and Africans an opportunity to own a stake in the refinery.
“With a minimum subscription of just 10 shares, the offer is designed to give ordinary Nigerians and Africans an opportunity to own a stake in the refinery,” he said.
The refinery is valued at approximately $47.6 billion based on the offer terms, although some reports have described its value as nearly $50 billion.
The fundraising is expected to support the company’s expansion programme, which is projected to cost about $14.3 billion.
According to reporting on the company’s IPO documents, the plan is to increase crude processing capacity from about 700,000 barrels per day to 1.4 million barrels per day by 2029.
The expansion is expected to strengthen the refinery’s ability to supply petroleum products to domestic and international markets and consolidate its position in the global refining industry.