The Dangote Group has opened talks with Nigeria’s regulator to increase the shares offered in the ongoing Lagos refinery Initial Public offer (IPO) as the issuance faces high demand from both retail and institutional investors.
The IPO, which is Africa biggest ever, seeks to raise Sh207.5 billion and runs between September 14 and October 13 with sale of 4.1 billion ordinary shares, equivalent to just about 3.4 percent shareholding of the Dangote Petroleum Refinery.
The President of Dangote Group, Aliko Dangote, says that the Group’s decision to approach the Nigeria’s Securities and Exchange Commission (SEC) for the green light follows high demand for the shares.
The IPO targeted both retail and institutional investors with the aim of having at least 10 million unique shareholders.
‘We will try and see how much we can actually accommodate and we will try as much as possible to accommodate more than what we have advertised and that is for sure,’ Aliko Dangote told the Business Daily.
‘We have taken this to the regulator. The demand from Kenya and Botswana alone can actually fill what we are looking for but the main interest is actually to get as many shareholders as possible.’
Whereas the Group has not disclosed how it intends to realise increased float of shares for the IPO, it could potentially entail dilution of some of the existing shareholders whereby they cede a portion of their stake to allow more to be made available for these seeking to own a stake of the refinery.
Dangote Oil Refining Company Ltd holds the lion’s share of the Refinery being listed, controlling a 65.8 percent stake followed by Dangote Industries Ltd, Nigerian National Petroleum Company and Greenview International Corporation which hold 14.9 percent, 6.8 percent and 6.5 percent stakes, respectively.
The deal is being marketed as a “people’s IPO” and would be Africa’s largest.
Strong demand has temporarily disrupted some financial technology platforms as investors rushed to buy into the refinery, which is widely viewed as a bet on Africa’s need for greater refining capacity.
Mr Dangote did not provide specific investor demand figures for the offer.
‘We will do something very creative to allow us to accommodate our African brothers and sisters in the IPO and then the larger population outside Africa,’ Mr Dangote said.
Kenyan investors have been given access to the IPO for as little as Sh49 via the Nairobi Securities Exchange (NSE) under a new vehicle that awaits regulatory approval.
Investors will be able to buy shares valued at Sh49 a piece via global depository receipts (GDRs)-instruments that enable investors to hold shares in foreign companies without directly trading on the offshore markets and needing to open foreign brokerage accounts.
Of the amount to be raised through the IPO, Sh82.17 billion will be earmarked for development and expansion of supporting infrastructure and other offsite utilities while Sh67.09 billion will be allocated to expansion and enhancement of core refining process units.
Mr Dangote said that the purpose of the IPO is not fundamentally to raise financing to boost the refinery’s expansion but to open ownership to retail and institutional Africans seeking to own a stake in one of the continent’s largest firms.
‘The IPO we are doing is not really that we want to raise money. It is purely that we want to widen ownership of a home-grown enterprise to Africans who wish to be part of the story,’ Mr Dangote said.
Dangote Group further plans to list, on the NSE, the East African Refinery in Lamu whose groundbreaking took place on Wednesday.