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Aliko Dangote, Africa’s richest man, is headed for a sharp increase of $23 billion in his personal fortune as his oil refinery begins an initial public offering that could value the business at nearly $50 billion.
The offering, which opens Monday, is expected to raise about $1.6 billion for Dangote Petroleum Refinery and Petrochemicals FZE and put the billionaire’s networth at nearly $60 billion, according to Bloomberg.
The 69-year-old business billionaire roughly holds an estimated $35 billion in networth per Bloomberg’s latest billionaire index figures at the time of this report.
What they are saying
Bloomberg calculations estimate that Dangote’s networth could rise from about $35.3 billion to as much as $58.2 billion if the refinery receives the projected valuation.
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- That would increase his fortune by roughly $22.9 billion and move him higher among the world’s wealthiest people, potentially placing him ahead of U.S. hedge fund manager Ken Griffin and technology billionaire Eric Schmidt.
- This is due to the fact that Dangote holds a lion’s share of the company at about 84.34%.
- The IPO is expected to become Africa’s largest, marking a major test for Nigeria’s capital markets and the ability of local investors to participate in one of the continent’s largest industrial businesses.
Dangote, 69, has described the offering as an “IPO for the people.” The minimum subscription is 10 shares, while the company is also offering Sharia-compliant investment options and a structure that could allow investors to receive dividends in U.S. dollars.
The offer is scheduled to close Oct. 13, with the company expected to list on the Nigerian Exchange soon afterwards.
Get up to speed
The Dangote Refinery has been working towards a public listing for several months, with the company first turning to private investors to raise fresh capital ahead of the IPO.
Nairametrics reported that the refinery was valued at $39.1 billion as it sought to raise additional capital through a private placement. By July, the company had raised $2.5 billion through the deal, providing fresh funding for its expansion plans.
The IPO plans became clearer in September when reports emerged that Dangote Refinery would price the shares at N525 each, with the offer targeting about $1.5 billion. The refinery was expected to open its order book on September 14.
The plans have now moved closer to execution following the SEC’s approval of the IPO, which involves 4.1 billion shares and could raise about N2.15 trillion if fully subscribed.
What you should know
The refinery, located on the outskirts of Lagos, is the centerpiece of Dangote Group’s plan to expand beyond Nigeria. The facility currently has the capacity to process 700,000 barrels of crude oil a day, making it one of the world’s largest single-train refineries. Dangote plans to double its capacity as part of a further $14.3 billion investment program.
- The group has said the refinery will also support its broader ambition of building an Africa-wide industrial business. Its plans include a proposed 700,000-barrel-a-day refinery in Kenya, which would expand the group’s presence into East Africa.
- The Lagos refinery reached full capacity this year and has helped Nigeria reduce its dependence on imported refined petroleum products. The development has also positioned the country as a net exporter of refined fuel.
- For Dangote, the IPO represents the culmination of more than a decade of investment. The businessman has spent about $19 billion developing the refinery, including infrastructure such as roads, a port and quays needed to transport heavy equipment to the site.
The listing will also give investors a direct stake in one of Dangote Group’s most ambitious businesses, while providing the company with capital for expansion.
