After Kenya, Uganda opens Dangote refinery IPO to domestic investors

KAMPALA, Uganda 

The Dangote Petroleum Refinery has opened nearly $300.4 million, or almost 20 per cent, of its $1.6 billion initial public offering (IPO) to investors in East Africa, in a move that could deepen the regional ownership of Africa’s biggest refinery.

The development followed regulatory approvals in Kenya and Uganda allowing eligible investors in the two countries to participate in the share sale, with the East African portion of the offer structured through Global Depositary Receipts (GDRs) to be listed on the Nairobi Securities Exchange.

A Global Depository Receipt (GDR) is a negotiable financial certificate issued by a depositary bank that represents a specific number of shares in a foreign company.

An information memorandum released yesterday showed that the regional offer comprises about 729 million GDRs, priced at 53.50 Kenyan shillings each, with the offer capable of raising about 39 billion Kenyan shillings, equivalent to approximately $300.4 million, if fully subscribed.

Each GDR represents one underlying share in Dangote Petroleum Refinery and Petrochemicals FZE.

The East African offer represents almost 20 per cent of the refinery’s broader IPO target of at least $1.6 billion, which was launched by Aliko Dangote in September to raise funds for the planned doubling of the refinery’s capacity from 700,000 barrels per day to 1.4 million barrels per day.

The IPO, which Dangote has branded a “people’s IPO”, is expected to be Africa’s largest, further extending the refinery’s ownership beyond its existing Nigerian base. 

Uganda’s Capital Markets Authority said that it had approved investors in the country to participate in the offer of securities under the IPO of Dangote Petroleum Refinery and Petrochemicals FZE.

Similarly, Kenya had earlier approved a GDR route that allows eligible Kenyan investors to access the IPO through negotiable certificates representing shares in the Nigerian company.

Kenya’s Capital Markets Authority also required Dangote Petroleum to maintain a minimum public free float of 15 per cent of the total issued GDR pool among investors in the country. 

The GDR offer is scheduled to close on October 13, with allotments expected around November 12 and listing to take place 15 business days after the allotment.

The minimum subscription is 2,000 GDRs and thereafter in multiples of 100, while the minimum success threshold for the GDR offer is 50 million Kenyan shillings.

The Kenyan offer is being jointly advised by Renaissance Capital (Kenya) Limited and Lagos-based Renaissance Capital Africa, while Stanbic Bank is serving as custodian and receiving bank, it was learnt.

The expansion of the Dangote refinery’s ownership to East African investors comes as the group simultaneously pushes into the region with plans to replicate its Lagos refining project in Kenya. 

At the groundbreaking of the proposed Kenyan refinery on September 30, Dangote offered East African countries a combined 30 per cent equity stake in the planned project, which is estimated to cost about $17 billion.

The proposed Kenyan refinery is expected to take approximately five years to complete and could provide East African investors with access to about $1.5 billion worth of equity in the project.

David Ndii, economic adviser to Kenyan President William Ruto, had disclosed at a capital markets forum in Nairobi that Kenya would take a 10 per cent stake, while Ethiopia and Rwanda had also expressed interest in participating.

The East African IPO offer comes at a time when Dangote is seeking to establish a broader regional investor and commercial base for its refining business. 

The Lagos refinery, built by the Dangote Group over about 10 years at an estimated cost of $20 billion, currently has a processing capacity of 700,000 barrels of crude oil per day.