Dangote Refinery secures $1 billion underwriting ahead of IPO

 

Nigeria's Dangote Refinery has secured ‌a $1 billion underwriting programme for its planned stock market listing that could become Africa's largest IPO, marking a major step toward bringing the continent's biggest refinery to investors.

The underwriting comprises a fully funded $600 million tranche for the refinery's completed private placement and ​a further $400 million commitment to support the planned initial public offering, the deal's co-financial advisers Marob ​Strategies and Lilium Capital said on Tuesday.

Dubai-based advisory firm Marob and Washington-based investment group ⁠Lilium said it was implemented through Pan-African Refinery Investment, a special purpose vehicle and subsidiary of Lilium.

In ​IPO transactions, underwriting is a service offered by capital firms and investment banks to a company to guarantee ​the sale of its shares to investors.

Majority-owned by Africa's richest man Aliko Dangote, 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 two weeks ago, although ​the final size of the offering has yet to be determined.

"The successful completion of the private placement, together ​with the $400 million underwriting commitment ... in support of the planned IPO, reflects confidence in the refinery's strategic role," Aliko Dangote ‌said ⁠in the joint statement.

OCTOBER LISTING

The $20 billion facility near Lagos, which processes about 700,000 barrels of crude a day, has emerged as a major beneficiary of supply disruptions linked to the Iran war,exporting jet fuel across Africa and into Europe as buyers sought alternative supplies.

That has sparked widespread interest in the sale of shares in the ​plant, African market participants say.
The $400 ​million underwriting commitment would ⁠be implemented upon the launch of the IPO, subject to market conditions and regulatory approvals, Marob and Lilium said.

The public offering is expected to receive regulatory approval ​in the coming weeks and to list on the Nigerian market in October, ​with other ⁠African capital markets also involved.

Investors have responded strongly to the deal, the advisers said, citing African and Caribbean sovereign wealth funds, governments, institutional investors and other eligible investors.

"It is expected to help deepen African capital markets, broaden ownership ⁠of a ​strategic African enterprise and demonstrate how African institutions can mobilise ​long-term capital for industrialisation," the advisers added.

Dangote is also planning to build a new refinery along Kenya's coast, together with East African governments.

By Chijioke Ohuocha and Duncan Miriri, Reuters