(LAGOS, NIGERIA) – Dangote Group has opened talks with Nigeria’s securities regulator to increase the number of shares offered in its refinery initial public offering, as the issuance draws strong demand from retail and institutional investors.
The IPO, Africa’s largest, seeks to raise KES 207.5 billion ($1.6 billion / GBP 1.2 billion) and runs from 14th September to 13th October. It involves the sale of 4.1 billion ordinary shares, equal to about 3.4% of Dangote Petroleum Refinery.
The offering targets both retail and institutional investors with the aim of securing at least 10 million unique shareholders.
Aliko Dangote, President of Dangote Group, said the decision to approach the Securities and Exchange Commission for approval to raise the float follows high demand for the shares.
“We will try and see how much we can actually accommodate and we will try as much as possible to accommodate more than what we have advertised and that is for sure,” Mr Dangote told the Business Daily.
“We have taken this to the regulator. The demand from Kenya and Botswana alone can actually fill what we are looking for but the main interest is actually to get as many shareholders as possible.”
The group has not disclosed how it intends to realise the increased float. It could involve dilution of existing shareholders, who would cede a portion of their stake to make more shares available to new investors.
Dangote Oil Refining Company Ltd holds the largest stake in the refinery being listed at 65.8%, followed by Dangote Industries Ltd, Nigerian National Petroleum Company and Greenview International Corporation with 14.9%, 6.8% and 6.5% respectively.
The deal is being marketed as a “people’s IPO” and would be Africa’s largest. Strong demand has temporarily disrupted some financial technology platforms as investors rushed to buy into the refinery, which is seen as a bet on Africa’s need for greater refining capacity.
Mr Dangote did not provide specific investor demand figures for the offer.
“We will do something very creative to allow us to accommodate our African brothers and sisters in the IPO and then the larger population outside Africa,” Mr Dangote said.
Kenyan investors have been given access to the IPO for as little as KES 49 ($0.38 / GBP 0.29) via the Nairobi Securities Exchange under a new vehicle awaiting regulatory approval. Investors will be able to buy shares valued at KES 49 each through global depository receipts, instruments that allow investors to hold shares in foreign companies without trading directly on offshore markets or opening foreign brokerage accounts.
Of the amount to be raised, KES 82.17 billion ($637 million / GBP 486 million) will be earmarked for development and expansion of supporting infrastructure and other offsite utilities. A further KES 67.09 billion ($520 million / GBP 397 million) will be allocated to expansion and enhancement of core refining process units.
Mr Dangote said the purpose of the IPO is not fundamentally to raise financing for the refinery’s expansion but to widen ownership to retail and institutional Africans seeking a stake in one of the continent’s largest firms.
“The IPO we are doing is not really that we want to raise money. It is purely that we want to widen ownership of a home-grown enterprise to Africans who wish to be part of the story,” Mr Dangote said.
Dangote Group also plans to list the East African Refinery in Lamu on the Nairobi Securities Exchange. The groundbreaking for that facility took place on Wednesday.