Dangote refinery plans retail-focused IPO, no foreign listing for now

Dangote Petroleum Refinery's planned October IPO, which could become Africa's largest, is designed to let Nigerians share in the company's growth, its CEO ​told Reuters, adding that a foreign listing is at least three years away.

The ‌refinery has submitted an application for a $5 billion IPO to Nigeria's Securities and Exchange Commission, a source familiar with the matter told Reuters this month, although the final size is not decided.

"We really want to drive ​participation," CEO David Bird said in an interview. "The mandate of the IPO was to be ​the people's IPO."

Bird said the company wanted at least three years of ⁠proven production and financial performance before pursuing an overseas listing, which could support a stronger ​valuation. London has been mentioned as a possible venue.

Bird declined to comment on the size of ​the IPO or the refinery's valuation. The source said the company could take into account the $2.5 billion raised in a July private placement, which valued the refinery at about $40 billion.

STRONG INTEREST

The refinery, owned by Africa's richest man Aliko ​Dangote, has emerged as a major beneficiary of disruption linked to the Iran war, selling jet ​fuel across Africa and into western Europe as buyers sought alternative supplies. It became Europe's largest supplier of ‌jet ⁠fuel in June and July, Bird said.

He said preparations for the IPO were on schedule and investor interest had been strong during pre-marketing and the July private placement.

Africa Finance Corporation said on Thursday it led a group of strategic investors in the private placement, adding the deal ​was 3.7 times subscribed ​and attracted strong demand ⁠from African and international institutional investors.

Bird said the refinery compared favourably with U.S. refining assets because of its access to local crude supplies, ​strong domestic demand and integrated operations.

PLANNED EXPANSION

Bird confirmed the company aims ​to double ⁠refining capacity to 1.4 million barrels per day within three years, funded partly through the IPO and debt. He said the expansion would cost substantially less than the roughly $20 billion spent on the ⁠original ​refinery.

Africa remains structurally short of refined fuels and petrochemicals, creating ​significant room for growth, Bird said.

The refinery supplies most of Nigeria's gasoline and diesel demand and all of its ​jet fuel needs.

By Chijioke Ohuocha and Isaac Anyaogu, Reuters