Aliko Dangote to use $5 billion IPO to expand Lagos refinery, build Kenya plant

Africa’s richest man, Aliko Dangote, plans to deploy the $5 billion expected from the planned primary listing of his refinery on the Nigerian Exchange (NGX) to expand processing capacity at its Lagos facility and build a similar refinery in Kenya. The investment forms part of his long-term push to reduce Africa’s dependence on imported refined petroleum products and position the continent as a net exporter of fuel. 

The expansion plans build on Dangote Industries’ announcement in early July that it will build a refinery in Lamu, Kenya, ending speculation over whether the project would be located in Kenya or neighboring Tanzania. David Ndii, chairperson of Kenyan President William Ruto’s Council of Economic Advisers, said the planned $17 billion refinery will be developed as an integrated petrochemical complex producing fuels, chemicals, fertilizers and other industrial products.

Championing Africa’s energy independence

Designed to process 700,000 barrels of crude oil a day, the Lamu facility is expected to become East Africa’s largest refinery and a key industrial project along the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) corridor. The project also comes as Dangote prepares to take his $20 billion petroleum refinery public in what could become the largest initial public offering in African capital markets.

The Nigerian billionaire is seeking to raise about $5 billion through the IPO, which is expected to close by October after the company completed a $2.5 billion private placement to strengthen its balance sheet. The proceeds would help finance the Lagos expansion and the planned refinery in Kenya, extending the company’s refining footprint beyond Nigeria.

The fundraising effort follows a strong year for the Lagos refinery. The 650,000-barrel-a-day facility reached full operating capacity earlier this year and expanded sales of gasoline, diesel and jet fuel across Africa. During the recent conflict in the Middle East, the refinery also increased exports of aviation fuel to customers in Africa and Western Europe, helping it win additional business in international markets.

Pan-African investors line up for Dangote Refinery IPO

Interest in the IPO is growing beyond Nigeria. Financial advisers working on the transaction have held discussions with market operators in South Africa, Kenya, Egypt, Ghana and Rwanda as they seek to broaden participation from investors across the continent. Kenyan institutional investors, including pension funds, could invest more than $500 million in the offering.

Dangote Petroleum Refinery & Petrochemicals FZE has submitted an application to Nigeria’s Securities and Exchange Commission for approval to list on the Nigerian Exchange, according to a person familiar with the matter. Regulatory approval is expected within weeks, allowing the company to publish its prospectus in September.

The planned Lagos listing could also be followed by a second listing in South Africa. Recent reports said the Johannesburg Stock Exchange, Africa’s largest bourse by market value, is in discussions with Dangote Group about a secondary listing after the refinery debuts on the Nigerian Exchange. The JSE has indicated that the company intends to complete its primary listing in Lagos before pursuing a listing in Johannesburg.