Aliko Dangote is about to make a spectacular jump in personal wealth as his oil refinery opens to public investors in what will be Africa’s biggest ever stock offering. The 69-year-old Nigerian industrialist, who has held the mantle as Africa’s wealthiest man for many years, could make as much as $23 billion if flotation of Dangote Petroleum Refinery and Petrochemicals goes ahead as planned. That increase would raise his fortune from around $35 billion to nearly $58 billion and position him firmly among the globe’s ultra high net worth individuals.
The issue is open from September 14 to October 13. 4.1 billion shares will be offered at a price of 525 naira each and will raise approximately $ 1.6 billion (up to about $ 2.1 billion if the future over-allocation option will be used). Implied valuation of the company is estimated to be in the range of $ 47 billion to $ 50 billion. After the offer, Dangote will hold the vast majority (over 84 percent) of the equity of his business and That’s why the increased market value of his remaining shares explains most of the anticipated increase in his fortune.
He has essentially engineered the offering as an, “IPO for the people.” The entry level of just ten units, about $4 at today’s rates, is low enough to attract regular Nigerians, young people, even retail investors accessing their accounts via banking apps and fintech platforms. The firm has also offered Sharia-compliant shares and signaled that dividends might be paid in dollars, all with a view to attracting a wider audience across Africa.
The refinery itself is a monument. Having been constructed over a period of 11 years for nearly $20bn on the fringes of Lagos, it is the biggest single-train in the world with a capacity of approximately 700,000 bpd achieved in 2006. It achieved its full capacity operation in 2006 and has posted strong results recently, largely owing to market dislocation surrounding the Iran conflict to 1.82bn of net profit on sales of c13bn for the first half of 2006.
The cash from the share issue will underwrite an aggressive growth strategy. Dangote plans to increase by a factor of two the output of his Nigerian operation and develop another huge energy complex in Kenya, replicating a refining belt from Atlantic to Indian Ocean. He has talked about the necessity for Africans to own their own development and the listing as a capitalization and contagion strategy. The listing is very important to Nigeria’s capital markets.
