The Johannesburg Stock Exchange has been courting Aliko Dangote's refinery, and its chief executive said so on television. Valdene Reddy told CNBC Africa that the plan is for Dangote to list in Nigeria first, with a strong intent to bring the listing to South Africa shortly afterwards. The Nigerian half of that starts this morning.
Dangote Petroleum Refinery and Petrochemicals opens Africa's largest share sale on 14 September, selling 4.1 billion shares at 525 naira apiece to raise about $1.6 billion. The offer runs until 13 October and the shares are expected to start trading on the Nigerian Exchange in November. The smallest order allowed is ten shares, and anyone who buys that and holds on gets one free share after a year and a second after two.
What the extra money buys
Institutions were here first, and they paid less. A private placement in July drew $2.5 billion, was 3.7 times oversubscribed, and valued the refinery at close to $40 billion. Today's price puts it at $49 billion. That gap is the interesting part: public buyers are being asked to pay a premium over money that arrived weeks earlier.
What the premium is not buying is today's refinery. The plant outside Lagos cost about $20 billion to build and now runs at 700,000 barrels a day, above the capacity it was designed for. That is roughly what the US-listed refiner HF Sinclair processes, and the market values HF Sinclair at around $16 billion. The figure investors are being asked to underwrite is the plant Dangote intends to build instead: double the throughput by 2028, which he says would make it the largest single-train refinery in the world.
Ten million shareholders
The ambition for the share register is the part with no precedent behind it. Dangote wants ten million shareholders. The Nigerian record for a single offer is about 181,000. At the signing ceremony in Lagos he said there is no segregation of who can own the share, and named drivers, cooks and servers among the people he wants holding one. Anyone with a Nigerian bank verification number can apply.
There are two things to find out. One is whether that many Nigerians have the money. The other is whether they have to sell something else to find it. Nigeria's stock market has run hard, up about 73% in dollar terms this year, and domestic investors did close to nine tenths of the trading in the first half. Market capitalisation is not the same as cash available, as BusinessDay Nigeria points out, and the offer will test how much fresh money the market can raise without draining the shares already in it.
For South Africa, the numbers Reddy put beside her pitch are the argument for hosting it. The JSE turns over between $1.5 billion and $2 billion on an average day. The Nigerian market turns over $10 million to $20 million. Dangote's chief financial officer, Bruce Tanner, told Business Times he was not ruling a Johannesburg listing out.
