Momentum grows for Africa’s largest-ever IPO by Dangote

The refinery, which took around seven years to build at a cost of $20 billion, has become an influential player in Africa’s energy market since its launch in September 2024. The company meets supply needs for a Nigerian market that no longer depends on refined fuel imports that were subsidized by the government. It also now exports to several African countries including Cameroon, Côte d’Ivoire and Ghana. It has seen a surge in demand this year in the wake of the Iran war that has disrupted normal trade routes, exporting over a billion and half liters of refined fuels last month alone.

Less than two years after it commenced operations, the Dangote refinery has raised its daily capacity by 100,000 barrels, with plans to double output to 1.4 million barrels per day. The company’s founder intends to build a refinery in East Africa too, preferably in Kenya. A goal to generate at least $100 billion in revenues by 2030 is among the refinery’s key performance targets, Dangote said on a tour of his facilities for visitors in May.

Nigerian pension funds that hold nearly $20 billion in assets will be able to participate in the IPO after regulators waived rules that restrict investment to companies that had been profitable for at least three years. Wealthy individuals — such as Femi Otedola whose holdings in Nigerian oil, banking and power generation ventures give him a $1.4 billion net worth — are also keen. Otedola said he sold shares in his power company in order to buy up to $100 million worth of stock in the upcoming Dangote listing.

A successful IPO would extend Dangote’s place as Africa’s wealthiest man. The 69-year-old’s fortune has risen by nearly 22% so far this year to $36.5 billion, according to the Bloomberg Billionaire’s Index. But the magnate has said he hopes the listing will help other Africans share in the value created by companies in his empire that also includes sugar and fertilizer companies.

Enthusiasm in Nigeria for the refinery’s public offer has been tied to Dangote’s promise that investors will earn their dividends in dollars despite investing in naira. But while it is an exciting prospect for Nigerians who have endured high inflation and steep devaluations of the local currency in the last three years, some firms have cautioned would-be investors to weigh the risks of their potential bets carefully.

“Without strong export revenue, the whole structure weakens,” Lagos-based savings and investment company Cowrywise wrote in an analysis on the expected IPO. It warned that Dangote’s ability to deliver promised dollar returns depended on a consistent level of exports, in the absence of which “the dollar pool shrinks and the dividend with it.”

Two Ghanaian companies — beverage producer Kasapreko, and Zen Petroleum — both recorded oversubscribed IPO rounds this year. Each has ridden the wave of the Ghana Stock Exchange whose benchmark index is up by more than 60% since the beginning of the year.

Africa’s equities market on the whole has been on a bull run over the past year: S&P’s All Africa index — a composite of 13 exchanges including those of Ghana, Nigeria, and the continent’s largest South Africa — is up by 30% compared to last year.