Nigeria’s Dangote Group plans to price the initial public offering of its refinery unit at 525 naira ($0.40) per share, potentially raising about $1.5 billion in what would be Africa’s largest-ever share sale, two people with direct knowledge of the deal told Reuters.
The offering will put investor appetite to the test for one of Africa’s most ambitious industrial projects, a 650,000-barrel-per-day refinery that has reshaped Nigeria’s fuel market since beginning operations and is increasingly benefiting from disruptions to global energy supplies linked to the war involving Iran.
The refinery, built at a cost of about $20 billion on the outskirts of Lagos, has expanded its role beyond Nigeria by exporting refined products, including jet fuel, to markets across Africa and Europe.
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The company plans to offer 4.1 billion shares, the sources said, speaking on condition of anonymity because the terms have not yet been made public. They did not disclose what percentage of the refinery the shares would represent.
The order book is expected to open on September 14, according to a third source, matching a timetable announced by Aliko Dangote, the group’s majority shareholder, on Thursday.
A formal signing ceremony with the stock exchange is expected next week, according to two company sources, marking the final preparations for a listing that could become a landmark transaction for Nigeria’s capital markets and the wider African investment landscape.
The refinery’s majority shareholder is seeking to raise capital partly to finance an ambitious expansion that would more than double its capacity to 1.4 million barrels per day. The company has already secured a $400 million underwriting commitment for the IPO.
The proposed share sale also includes a greenshoe option that would allow roughly 15% more shares to be sold if demand exceeds the base offering, according to one of the sources.
Valuation to Face Investor Scrutiny
The IPO comes after a private placement in July implied a valuation of about $40 billion for the refinery. That valuation is likely to be closely examined by investors as they compare Dangote’s refinery with publicly traded global peers.
Turkey’s Tupras, which has a similar combined refining capacity spread across four sites, has a market value of about $12 billion. New York-listed HF Sinclair, with refining capacity of roughly 678,000 barrels per day, is valued at around $16 billion.
The comparison is complicated by differences in geography, product mix, ownership structures and growth prospects, but the valuation gap highlights the challenge Dangote faces in persuading investors to assign a substantial premium to a relatively new and strategically important refinery.
At 525 naira per share, the offering would also give investors a direct opportunity to participate in a business whose growth prospects are closely tied to Nigeria’s efforts to reduce its dependence on imported petroleum products and establish itself as a regional refining and export hub.
The refinery has become particularly important as Nigeria attempts to retain more value from its crude production domestically rather than exporting crude and importing refined fuels.
Its growing export footprint provides another potential source of earnings. Supply disruptions associated with the Iran conflict have tightened fuel markets in some regions, creating opportunities for refiners with access to crude and the ability to supply markets experiencing shortages.
Dangote targets more than $12 billion EBITDA
Aliko Dangote has set an exceptionally ambitious target for the refinery, telling a business meeting in Botswana on Thursday that he wants it to become one of Africa’s largest companies and generate more than $12 billion in earnings before interest, tax, depreciation and amortization.
The refinery does not publicly disclose detailed financial results, making the IPO prospectus and subsequent disclosures vital for investors seeking to assess its profitability, cash flow, debt obligations and capital requirements.
The scale of Dangote’s earnings target is likely to be one of the central issues for investors weighing the offering. The company must demonstrate not only that its enormous capital investment can generate strong margins, but also that those margins can be sustained through changes in crude prices, refining spreads, domestic fuel demand and global market conditions.
The planned expansion to 1.4 million barrels per day would increase that opportunity but also raise the amount of capital required and expose the company to greater operating and market risks.
For investors, the IPO therefore represents a bet on both the current economics of the refinery and Dangote’s ability to turn it into a much larger energy platform.
Africa-Wide Investor Push
Dangote, Africa’s richest man, is seeking broad participation in the offering and has emphasized that the deal should not be viewed as a transaction aimed solely at Nigerian investors.
“This is not a Nigerian listing. It’s an African listing, and we are going to pay everybody, including the Nigerian listing, in dollar terms,” Dangote said at the Botswana meeting.
The effort to attract investors from across the continent could give the offering significance beyond the refinery itself. A successful deal would demonstrate the ability of African capital markets to absorb a multibillion-dollar equity transaction tied to a major industrial asset and could deepen investor interest in large African infrastructure and energy projects.
For Nigeria, the timing is also important. A large, successful IPO would provide a major test of the depth of domestic capital markets after years of currency volatility, inflation and economic uncertainty have affected investor sentiment.
The refinery’s sheer scale makes the transaction unusual. Built for roughly $20 billion, it is among the largest privately developed industrial projects in Africa and has required years of investment before reaching commercial scale. Its public listing would shift part of that investment story from private ownership into the capital markets, giving institutional and retail investors a direct stake in the refinery’s future.
However, financial experts note that the offering will ultimately be judged not just by the amount raised but by the valuation investors are willing to accept. A strong order book would support Dangote’s expansion plans and validate the refinery’s ambitious earnings projections. Weak demand, or heavy pressure for a lower valuation, would signal that investors remain cautious about the risks associated with the business.