Dangote Refinery secures $400 million commitment ahead of $5 billion IPO

Dangote Petroleum Refinery & Petrochemicals FZE has secured a $400 million underwriting commitment from investors ahead of its planned initial public offering (IPO), as the company moves closer to what could become one of Africa’s largest stock market listings.

The commitment was disclosed by Bloomberg in a report on Tuesday, citing an emailed statement from the parties involved in the transaction.

The latest funding commitment comes after the refinery raised $2.5 billion through a private placement in July, strengthening its balance sheet ahead of the planned IPO and its next phase of expansion.

What they are saying

The $400 million commitment is being provided by Marob Strategies and Consulting DIFC Ltd. and Lilium Capital Group, which have been appointed as co-financial advisers to Dangote Petroleum Refinery & Petrochemicals.

According to the firms, the commitment is tied to the planned public offering and will become effective when the IPO is launched, subject to several conditions.

• “This will be implemented upon the launch of the IPO, subject to market conditions, corporate and regulatory approvals, the execution of definitive documentation and compliance with applicable securities laws,” they said in the statement.

The arrangement therefore represents financial backing for the planned offering rather than a completed $400 million cash injection into the refinery.

Get up to speed

The new underwriting commitment adds to the growing pool of capital and investor interest surrounding Dangote Refinery as the company prepares for its planned IPO.

• On July 17, Nairametrics reported that Nigeria’s Dangote Petroleum Refinery had raised $2.5 billion through a private placement as it prepared for a planned initial public offering later in the year, strengthening its financing position ahead of its next phase of expansion.
• The fundraising was subsequently confirmed by the company, which said the private placement attracted substantial investor demand and resulted in the issuance of new equity.
• The company said the transaction was subscribed at 3.7 times the initial offer size, with approximately $2.5 billion worth of new equity issued and allotted. It added that proceeds from the transaction would be used to support the ongoing expansion of the refinery and petrochemical complex.

The development followed an earlier Nairametrics report in June that valued Dangote Petroleum Refinery at about $39.1 billion as the company sought to raise additional capital through a private placement.

What you should know

Dangote Petroleum Refinery is preparing for a planned IPO that could raise up to $5 billion, potentially making it the largest stock market listing in African history.

• In early August, Nairametrics reported that the refinery was targeting a $5 billion IPO, with the transaction expected to be concluded by October.
• The company has already submitted an IPO application to Nigeria’s Securities and Exchange Commission (SEC), with regulatory approval expected ahead of the offering and a prospectus expected to be published as the transaction progresses.
• The refinery also plans to prioritise a Nigerian listing rather than pursue an overseas stock market flotation in the near term. The company is not expected to seek a foreign listing for at least three years, giving priority to the planned Nigerian IPO before considering an international listing.

Funds from the IPO are expected to support the refinery’s expansion, including plans to increase its processing capacity from its current level of about 700,000 barrels per day to roughly 1.4 million barrels per day.

The expansion would position the Dangote facility among the largest refining complexes globally and further strengthen its role in Nigeria’s petroleum products market and its growing export business.