Kenyan Investors Could Commit KSh 64.75Bn to Dangote Refinery IPO -Reuters

Kenyan investors, including pension funds, could contribute as much as US$ 500Million (KSh 64.75Bn) to Dangote Refinery’s planned US$ 5Billion (KSh 647.50Bn) IPO, potentially giving the local market a significant role in Africa’s largest-ever public offering, according to a report by Reuters.

• The potential Kenyan contribution would represent 10% of the targeted fundraising, but not necessarily 10% ownership because the company has not disclosed the proportion of equity to be sold, and the final offer size will depend on approval from Nigeria’s Securities and Exchange Commission.
• The primary listing will be on the Nigerian Exchange, where the US$ 5Bn target would equal slightly more than 4% of the exchange’s US$ 116Bn market capitalisation.
• An unnamed source told Reuters that the appetite among Kenyan institutional investors is “tremendous.”

Dangote Petroleum Refinery & Petrochemicals FZE has submitted its initial application to the regulator and could publish a prospectus in September before completing the listing in October.

Kenya’s potential participation follows months of talks on widening access to the offer. On April 1, the Nigerian Exchange convened representatives from the Nairobi Securities Exchange and other African bourses in Lagos to discuss cross-border listings, with Dangote Refinery positioned as a potential test case for regional capital formation.

Reuters now reports that no cross-listing or dual listing on other African exchanges is planned at this stage. Kenyan investors may instead gain access through structured products such as global depositary receipts or exchange-traded instruments carrying corresponding dividend rights.

The fundraising is expected to support expansion of the US$ 20Bn Lagos refinery, which can process 650,000 barrels of crude oil daily. Dangote has said the group intends to more than double capacity to 1.4 million barrels per day.

The IPO also comes as Dangote advances plans for a second major refinery, this time in Kenya. In July, a group executive told Reuters that the proposed 700,000-barrel-per-day facility in Lamu could be funded through internal cash flow, bonds and an IPO. Construction could take up to three years, although it remains unclear whether proceeds from the Nigerian listing would be allocated to the Kenyan project.

A recent private placement raised US$ 2.5Bn (KSh 323.75Bn) for a 6% stake, implying a valuation of about US$ 40Bn (KSh 5.18Tn). Reuters noted that this appears ambitious against listed peers. Turkey’s Tupras, with comparable refining capacity across four plants, is valued at about US$ 12Bn, while US-listed HF Sinclair, with capacity of 678,000 barrels per day, is worth about US$ 16Bn.