In a significant step toward opening the largest refinery on the continent to investors, Nigeria’s Dangote Refinery has obtained a $1 billion underwriting program for its proposed stock market listing, which may become Africa’s largest initial public offering (IPO).
The deal’s co-financial advisers, Marob Strategies and Lilium Capital, stated on Tuesday that the underwriting consists of a fully funded $600 million tranche for the refinery’s completed private placement and an additional $400 million commitment to support the planned initial public offering.
It was carried out through Pan-African Refinery Investment, a special purpose company and subsidiary of Lilium, according to Washington-based investment organization Lilium and Dubai-based consultancy firm Marob.
Underwriting is a service provided by investment banks and capital firms to a company in initial public offerings (IPOs) that ensures the sale of the company’s shares to investors.
The refinery, which is mostly controlled by Aliko Dangote, the richest man in Africa, has applied to Nigeria’s Securities and Exchange Commission for a $5 billion initial public offering (IPO). The exact amount of the offering is yet unknown.
“The successful completion of the private placement, together with the $400 million underwriting commitment … in support of the planned IPO, reflects confidence in the refinery’s strategic role,” Aliko Dangote stated in the joint statement.
LISTING IN OCTOBER
The $20 billion plant in Lagos, which processes roughly 700,000 barrels of petroleum per day, has been a significant beneficiary of supply shortages related to the Iran war, exporting jet fuel into Europe and throughout Africa as customers looked for other sources.
According to African market participants, this has generated a lot of interest in selling shares in the plant.
Subject to market circumstances and regulatory permissions, the $400 million underwriting commitment would be put into effect following the IPO’s launch, according to Marob and Lilium.
It is anticipated that the public offering will be approved by regulators in the upcoming weeks and list on the Nigerian market in October. Other African capital markets will also be participating.
According to the advisers, governments, institutional investors, sovereign wealth funds in Africa and the Caribbean, and other qualified investors have all responded favorably to the deal.
It is anticipated to expand ownership of a strategic African firm, strengthen African capital markets, and show how African institutions can mobilize long-term finance for industrialization, the advisers continued.
Additionally, Dangote and the governments of East Africa intend to construct a new refinery along Kenya’s coast.
