Kenyan investors, led by pension funds, could inject up to US$500 million (KSh64.75 billion) into the planned US$5 billion (KSh647.5 billion) initial public offering (IPO) of Dangote Refinery, according to Reuters, positioning Kenya as a key participant in what could become Africa’s largest public share sale.
If realised, the Kenyan investment would account for around 10 per cent of the capital being raised, although it would not automatically translate into a 10 per cent equity stake since Dangote has yet to disclose the proportion of shares it intends to float. The final size of the offer also remains subject to approval by Nigeria’s Securities and Exchange Commission.
The refinery plans to list primarily on the Nigerian Exchange, where the targeted US$5 billion fundraising would amount to just over four per cent of the exchange’s estimated US$116 billion market capitalisation.
Reuters, citing a source familiar with the transaction, reported that interest from Kenyan institutional investors is exceptionally strong.
Dangote Petroleum Refinery & Petrochemicals FZE has already filed an initial application with Nigerian regulators and is expected to release its prospectus in September ahead of a potential listing in October.
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Kenya’s growing interest follows discussions between the Nigerian Exchange, the Nairobi Securities Exchange, and other African stock markets earlier this year on expanding regional participation in major listings. While Dangote Refinery had been viewed as a possible candidate for cross-border listing, Reuters reports that neither a cross-listing nor a dual listing is currently planned.
Instead, Kenyan investors may access the offering through financial instruments such as global depositary receipts or exchange-traded products linked to the shares and their dividend rights.
The capital raise will help finance the expansion of the US$20 billion Lagos refinery, which currently has a refining capacity of 650,000 barrels of crude oil per day. Dangote has indicated plans to increase output to 1.4 million barrels per day.
The IPO also coincides with the company’s plans to establish a second refinery in Lamu, Kenya. Reuters reported in July that the proposed 700,000-barrel-per-day facility could be financed through a combination of internal cash flow, bond issuances and a future IPO, although it remains uncertain whether proceeds from the Nigerian listing will contribute to the Kenyan project.
A recent private placement raised US$2.5 billion (KSh323.75 billion) for a six per cent stake in the refinery, implying a valuation of approximately US$40 billion (KSh5.18 trillion). However, Reuters noted that the valuation is significantly higher than several comparable global refining companies, including Turkey’s Tupras, valued at about US$12 billion, and HF Sinclair in the United States, which has a market value of roughly US$16 billion despite operating similar refining capacity.
