Dangote Taps $2.5 Billion in Private Share Placement Before IPO

Aliko Dangote has nearly completed a $2.5 billion private stock placement for his refinery business, according to people familiar with the matter, as the company prepares for Africa’s largest initial public offering.

(Bloomberg) — Aliko Dangote has nearly completed a $2.5 billion private stock placement for his refinery business, according to people familiar with the matter, as the company prepares for Africa’s largest initial public offering. Africa’s richest person sold a stake representing as much as 6% of Dangote Petroleum Refinery & Petrochemicals FZE at a pricing that would value the company at about $40 billion, one of the people said, asking not to be identified discussing confidential matters. The offer, which attracted around $4 billion in demand, initially sold $2 billion of shares followed by a further $500 million mainly backed by regional institutional investors, the person said.

Dangote officials declined to comment. The fundraising is a key milestone ahead of what is expected to be one of the most closely watched equity offerings in Africa and emerging markets more broadly. The firm also recently completed a debt offer in which it raised $750 million for the 700,000 barrels-per-day crude processing plant located on the outskirts of Lagos, Nigeria’s commercial hub.

The IPO could raise a further $1.5 billion to $2 billion with a listing expected as early as August, the people said. Dangote’s emphasis on African investor participation in the private placements and the retail offering of the IPO, is consistent with the billionaire’s push for greater regional ownership in the financing of the continent’s industrial development. Proceeds will go toward doubling the capacity of the refinery to 1.4 million barrels per day by 2028, making it one of the largest in the world as customers seek to reduce their reliance on Gulf energy supplies following the Feb. 28 outbreak of the Iran war.

Africa’s largest oil producer has significant crude reserves. The facility was envisioned as a way to tap more value from domestic production while easing dependence on petroleum imports, which strain Nigeria’s foreign exchange reserves and put pressure on the naira. The refinery has the capacity to meet Nigeria’s own needs and still have enough left over for exports, which made it a valuable asset when other nations turned to it to fill the gap after the Iran war disrupted traditional supply routes The expected IPO is likely to be heavily marketed to Nigerians and other African and international retail investors, the people said, in an effort to attract broad demand from ordinary citizens.

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