South Africa’s largest asset manager and Nigerian pension fund administrators have submitted applications for shares valued at nearly $1 billion in Dangote Petroleum Refinery, as institutional investors seek to acquire stakes in the facility, Africa’s largest oil refinery.
The applications are part of the refinery’s initial public offering (IPO), which has attracted subscriptions beyond the number of shares initially made available to investors.
Bloomberg reported on Friday, citing sources familiar with the transaction, that South Africa’s Public Investment Corporation (PIC) applied for shares worth about $500 million, while Nigerian pension fund administrators submitted applications estimated at between $400 million and $500 million.
The PIC, which oversees approximately $220 billion in assets, manages retirement funds belonging to employees of the South African government.
The Nigerian applications were submitted by pension fund administrators operating under the Contributory Pension Scheme, which serves approximately 11 million contributors through 20 pension funds.
Bloomberg also reported that an earlier private placement had already covered part of the proposed investment from Nigerian pension funds.
Sources familiar with the discussions disclosed that refinery founder, Aliko Dangote, may consider disposing of some of his personal shares through a separate transaction to accommodate the growing interest from institutional investors.
However, no final decision has been made regarding the proposed sale.
PenCom Grants Special Investment Approval
The reported interest from Nigerian pension funds follows a special exemption granted to pension fund administrators by the National Pension Commission (PenCom) in May, permitting them to participate in the refinery’s public share offering.
The approval temporarily waived some investment conditions, including requirements relating to a company’s profitability and record of dividend payments.
PenCom explained that the exemption was informed by the refinery’s strategic relevance to Nigeria’s economy and energy security, as well as the established track record of its parent company, Dangote Group.
Despite the special approval, the commission maintained that pension fund administrators must adhere to their respective investment policies, risk management frameworks and obligations to contributors and retirees.
The exemption is limited to the Dangote refinery’s share offering and does not automatically cover other investment opportunities.
Consequently, participating pension fund administrators remain responsible for evaluating the associated risks and safeguarding the retirement savings entrusted to them.
IPO Receives Applications Worth N5.85 Trillion
The interest from pension fund administrators comes as Dangote Refinery rounds off what is regarded as one of Africa’s largest public share offerings.
The refinery opened its IPO on September 14 and concluded the offer on October 27, making 4.1 billion shares available at N525 per share, with an initial fundraising target of approximately N2.15 trillion.
However, the offering attracted applications valued at about N5.85 trillion, considerably surpassing the original target.
Reports indicate that the refinery received nearly four million individual subscription applications, although this fell short of Dangote’s target of attracting 10 million retail investors.
The share offering places the refinery’s valuation at approximately $50 billion.
The overwhelming demand suggests that some investors may not receive the full volume of shares they applied for, as final allocations will depend on available shares and regulatory clearance.
The Securities and Exchange Commission (SEC) is expected to approve the final share allocation on November 17.
According to the IPO prospectus, trading is expected to commence 15 business days after the allotment, potentially around December 8. However, the company is seeking an earlier commencement date, subject to regulatory approval.
Dangote Refinery Plans Expansion to 1.4 Million Barrels Per Day
The public offering is part of the refinery’s strategy to secure funding for a major expansion of its operations.
Situated within the Lekki Free Zone in Lagos State, the facility has an installed processing capacity of 650,000 barrels of crude oil daily.
The company intends to increase its capacity to 1.4 million barrels per day, significantly boosting its ability to supply refined petroleum products to Nigeria and international markets.
The refinery has already emerged as a major contributor to Nigeria’s efforts to reduce its reliance on imported petroleum products.
The proposed expansion will require substantial financial resources, making the public share offering an important avenue for raising the capital needed to execute the project.
