The Dangote Petroleum Refinery has revealed that it will wait for at least three years before considering a listing on a foreign stock exchange, choosing to first build a stronger record of production, revenue and profitability.
The refinery’s Chief Executive Officer, David Bird, disclosed this in an interview with Reuters, saying the company wants to demonstrate consistent performance before approaching international investors.
For now, the refinery is concentrating on its planned initial public offering (IPO) in Nigeria, expected to take place in October. The offering could become one of the largest IPOs in Africa and is aimed at giving Nigerians an opportunity to own part of the massive refinery.
Bird said the company wants the domestic offering to become a “people’s IPO” by encouraging broad participation from Nigerian investors.
The refinery has reportedly applied to the Securities and Exchange Commission for approval of the IPO. A source familiar with the matter told Reuters that the offering could raise as much as $5 billion, although Bird did not confirm the proposed amount or the valuation being targeted.
According to the CEO, building three years of proven operational and financial performance would put the company in a stronger position when it eventually seeks an international listing. A longer track record could also help the refinery attract investors at a more favourable valuation.
The planned IPO comes shortly after the company completed a $2.5 billion private placement in July. The transaction valued the refinery at about $40 billion and was reportedly 3.7 times oversubscribed, showing strong interest from institutional investors in Africa and beyond.
The refinery is also looking beyond Nigeria as it expands its presence in international fuel markets. Bird said the facility became Europe’s largest supplier of jet fuel during June and July as buyers searched for alternative sources of supply amid disruptions connected to the Iran conflict.
Meanwhile, Dangote Refinery has ambitious plans to increase its production capacity. The company currently has a refining capacity of about 650,000 barrels per day but plans to raise this to 1.4 million barrels per day within the next three years.
The expansion is expected to be financed through a combination of funds from the IPO and borrowing. Bird said the additional investment would be significantly lower than the estimated $20 billion spent to build the original refinery.
The company believes its access to Nigerian crude, large domestic market and integrated operations give it an advantage over some competing refineries in other parts of the world.
With Africa still heavily dependent on imported refined petroleum products and petrochemicals, Dangote Refinery sees considerable room for expansion.
The refinery currently supplies a large share of Nigeria’s petrol and diesel needs, while also meeting the country’s jet fuel requirements.
By delaying an overseas listing, the company hopes to establish a stronger financial and operational history that could make it more attractive to global investors when the time eventually comes.
