Why Dangote is keeping an oversubscribed IPO open

The initial public offering (IPO) of Dangote Petroleum Refinery and Petrochemicals (DPRP) has already drawn three to four times the money it set out to raise, according to Aliko Dangote, Africa’s richest man. Yet the offer, due to close on 13 October, will now stay open until 27 October.

“It’s not about the amount; it’s about the number of people that we want to participate in this offer,” Dangote said on Monday, speaking on the sidelines of a visit by Kenyan lawmakers to the refinery in Lagos. “The IPO is going very well. We will extend the date because we want a lot of our African brothers and sisters to participate.”

The arithmetic explains why. DPRP is selling 4.1bn shares at ₦525 each to raise about ₦2.15trn ($1.62bn). The prospectus, seen by The Africa Report, puts the company’s post-listing value at about ₦65.22trn – roughly $49bn at the implied exchange rate.

That would make it by far the most valuable company on the Nigerian Exchange. It also means just over 3% of the refinery is on offer, or about 4% if a 30% overallotment option is used in full. The company is targeting up to 10 million retail investors and has set the minimum subscription at just 10 shares. Dangote calls it an “IPO for the people”. The goal is a broad base of owners, not a war chest.

Wider reach

The Securities and Exchange Commission (SEC) approved the two-week extension. DPRP says the extra time will help it reach investors elsewhere in Africa through more distribution channels and depositary-receipt programmes.

It also gives would-be buyers time to open accounts and complete identity checks. Dangote said talks with the Nairobi Securities Exchange had produced a workable model: “So we’re trying to replicate this in other exchanges.”

David Bird, DPRP’s chief executive, said the additional time would help the company “extend that opportunity to more investors across Africa”.

Record ambitions

At ₦2.15trn, the sale would be one of the largest in the history of Nigeria’s capital market. Dangote says it would be the biggest IPO ever carried out in Africa.

A fully exercised overallotment would lift proceeds to about ₦2.8trn ($2.1bn). The shares are expected to trade on the Main Board of the Nigerian Exchange once the offer closes. Dangote, 69, had hinted at a listing for more than two years before the company formally launched the process on 7 September.

Funding the expansion

The refinery, in the Lekki Free Zone, began production in 2024 and is already the world’s largest single-train plant. The proceeds will go towards a $14.3bn, five-year expansion programme due for completion by 2029. Last October, Dangote announced plans to more than double capacity, from 650,000 barrels per day (bpd) to 1.4m bpd.

The IPO will cover only 11-15% of the bill, depending on the overallotment. The rest will come from the company’s own cash, debt, trade finance and project finance.

Unanswered questions

DPRP’s statement cited “very strong interest” from investors across Africa and beyond but gave no subscription figures. Dangote’s claim of three-to-fourfold demand therefore cannot yet be verified, nor has the company said how shares will be allocated if demand far exceeds supply.

If it is serious about 10 million owners across the continent, many applicants may find their orders scaled back to make room for smaller ones. For Dangote, that may be the point. A register of millions of African shareholders would give the refinery a constituency far beyond Lagos. (BusinessDay)