The planned initial public offering, IPO, of Dangote Refinery on the Nigerian Exchange, NGX, could give millions of Nigerians an opportunity to become shareholders in one of Africa’s biggest industrial projects.
The proposed public offer, described as an “IPO for the People”, is designed to broaden ownership of the refinery by allowing ordinary Nigerians and other African investors to acquire shares in the company.
Rather than limiting ownership to a small group of major investors, the offer could bring a large number of individual investors into the refinery’s ownership structure.
At the Abuja Investor Roadshow, Group President and Chief Executive Officer of Dangote Industries Limited, Aliko Dangote, represented by Mrs. Fatima Wali Abdurrahman, Regional Director and Senior Adviser to Dangote, said the IPO was designed to give more people an opportunity to benefit from the refinery.
He linked the offer to his broader vision for Africa, stressing the need for Africans to play a leading role in building industries and creating wealth on the continent.
He said the Dangote Group’s expansion plans are based on the belief that Africans should not only consume products but also own and develop businesses that create jobs and economic opportunities.
The company plans to raise about N2.15 trillion through the IPO to support the refinery’s expansion and other growth plans.
The Dangote Refinery currently has the capacity to process about 700,000 barrels of crude oil per day but there are plans to increase the refinery’s capacity to 1.4 million barrels per day.
Under the proposed offer, shares will be sold at N525 each, with a minimum purchase of 10 shares. This means an investor can participate with a minimum investment of N5,250.
The relatively low entry point is intended to make the offer accessible to a broad range of Nigerians and encourage wider participation in the capital market.
The scale of the proposed ownership has also generated discussion about how large the refinery’s shareholder base could become.
If millions of investors eventually become shareholders, future shareholder meetings could require unusually large venues. However, the company has not announced any plan to hold its first Annual General Meeting in a stadium.
Professor Uche Uwaleke, Professor of Capital Market at Nasarawa State University, Keffi, said the IPO could benefit investors, the Nigerian capital market and the wider economy.
He explained that people who purchase shares would have a direct stake in the refinery and could benefit if the company continues to expand and generate profits.
Such benefits could come through dividends or an increase in the value of the shares. However, Uwaleke cautioned that investment returns are not guaranteed and investors should consider the risks before committing their funds.
He said the refinery could become an important source of long-term economic growth because its operations cover several areas, including petroleum refining, petrochemicals, storage, marine operations and power.
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Uwaleke also highlighted Dangote Group’s plans to expand across Africa, saying the IPO could help deepen public participation in the Nigerian capital market.
The professor said a successful Dangote Refinery listing could encourage other large privately owned companies to consider listing on the Nigerian Exchange.
He noted that Nigeria’s stock market has historically been dominated by major banks, telecommunications companies and a limited number of large businesses.
The listing of a major oil refining company would therefore give investors another significant sector in which to invest.
More large companies coming to the market could increase investment opportunities while bringing additional funds from Nigerian households and institutions into productive businesses.
Uwaleke said this could support companies seeking to expand, create jobs, increase production and contribute more to the economy.
Uwaleke also linked the refinery’s expansion to Nigeria’s long-term ambition of building a much larger economy.
He said achieving a $1 trillion economy would require the country to increase local production, reduce dependence on imports and expand exports.
The Dangote Refinery could contribute to this process by producing petroleum products locally and reducing Nigeria’s reliance on imported refined products.
Another speaker at the roadshow, financial analyst Ugodre Obi-Chukwu, said investors would be particularly interested in the refinery’s future profitability and share performance after the listing.
He explained that shareholders generally want to see the value of their investments increase, while also expecting companies to generate profits and potentially pay dividends.
Obi-Chukwu added that investors would also consider how easily the shares could be bought and sold once the company becomes listed.
He compared the refinery’s possible valuation with other major companies in the market, noting that its future value would depend largely on its ability to increase production, generate profits and expand its operations.
He presented a valuation scenario in which the refinery could command a significantly higher share price if the market eventually valued it at a level comparable with some major listed companies.
However, he stressed that such figures were estimates and should not be interpreted as guarantees of future returns.
For Obi-Chukwu, the significance of the IPO goes beyond the Dangote Refinery itself. He said Nigeria needed more companies to raise capital through the stock market to enable businesses to grow to the scale required to compete internationally.
He noted that a relatively small number of companies account for a significant portion of the Nigerian stock market’s total value.
According to him, the entry of more large companies would give investors more choices and contribute to the growth and depth of the capital market.
The refinery’s expansion could also have wider implications for Nigeria’s petroleum sector. For years, Nigeria exported crude oil while importing significant quantities of refined petroleum products. Increased local refining capacity could allow more value to be created within the country.
Dr Biodun Adedipe, Professor of Practice at James Hope University, said the refinery was already changing Nigeria’s position in the petroleum market.
He noted that although Nigeria is a major crude oil producer, the country had remained heavily dependent on imported petroleum products.
Adedipe said local refining could reduce this dependence and make Nigeria less vulnerable to disruptions in international petroleum markets.
He added that increased domestic refining could support other areas of the economy, including transportation, storage, manufacturing and businesses connected to the petroleum industry.
Dangote Group is also looking beyond Nigeria as part of its broader expansion strategy. The company has expressed plans to expand into other African markets, including a proposed refinery project in Kenya.
The wider ambition is to build businesses capable of supplying products across African markets rather than focusing solely on Nigeria.
For the company, the strategy reflects the belief that Africa needs more industries that are developed, owned and expanded by Africans.
For ordinary Nigerians, one of the major attractions of the proposed IPO is the opportunity to become shareholders in a major Nigerian industrial company without needing millions of naira. With the minimum subscription set at 10 shares at N525 each, an investor can participate with N5,250.
However, financial experts have cautioned that the IPO should not be viewed as a guaranteed route to making money.
Share prices can rise or fall depending on the company’s performance, market conditions and other economic factors.
Investors are therefore expected to study the company’s financial position, business plans and associated risks before deciding whether to participate.
Ultimately, the Dangote Refinery IPO could become significant not only because of the N2.15 trillion it seeks to raise, but also because of its potential to bring a large number of Nigerians into the capital market and broaden public ownership of a major industrial enterprise.
The Nation
