KENYANS can now invest in Dangote Refinery through a $300 million Nairobi Depositary Receipt programme, giving East African investors a new route to gain exposure to Nigeria’s landmark oil refining project.
Dangote Petroleum Refinery and Petrochemicals FZE is offering investors in East Africa nearly 20 percent of its initial public offering (IPO), following regulatory approvals in Kenya and Uganda for local participation in the share sale.
According to an information memorandum released on Wednesday, the refinery plans to offer about 729 million global depositary receipts (GDRs) at 53.50 Kenyan shillings each, targeting about 39 billion shillings, or $300.4 million.
Each depositary receipt represents one share in the refinery and will be listed on the Nairobi Securities Exchange.
Kenya’s Capital Markets Authority has approved the offer, while Uganda’s regulator has authorised its promotion to local investors.
The main offer in Nigeria involves 4.1 billion shares at 525 each, with the company seeking to raise about $1.6 billion. The Nigerian offer values the refinery at about $47.6 billion.
However, Kenyan investors will pay a slightly higher price. Each receipt costs about $0.412, compared with about $0.397 for a Nigerian share, representing a premium of roughly four per cent.
The minimum investment in Kenya is also significantly higher. Investors must purchase at least 2,000 receipts, costing about 107,000 Kenyan shillings, or $824.
This compares with the much lower minimum investment required for the Nigerian offer, where investors can participate with about $4.
Business Daily reported that the high minimum investment could exclude many small Kenyan investors from the offer.
The Nairobi offer, however, requires only 50 million shillings, or about $385,000, to proceed, meaning the listing can go ahead even if demand from Kenyan investors is relatively weak.
The offer is scheduled to close on October 13, the same date as the Nigerian share sale.
Allotments are expected around November 12, while trading of the depositary receipts on the Nairobi Securities Exchange is expected to begin in early December.
Renaissance Capital is acting as lead adviser on the transaction, while Stanbic Bank Kenya is the custodian.
The depositary receipts represent shares in Dangote’s Lagos-based refinery and are not linked to Dangote’s proposed refinery project in Lamu, Kenya, which has a separate financing plan.
The Nairobi offering expands access to Dangote Refinery beyond Nigeria and provides investors in East Africa with an opportunity to participate in the ownership of one of Africa’s largest industrial projects.