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Kenya's capital markets regulator has cleared the way for Kenyan investors to buy into Nigerian billionaire Aliko Dangote's refinery before its $1.6 billion initial public offering closes next week, approving a structure that will turn Nigerian shares into Kenyan-shilling receipts traded in Nairobi.
The Capital Markets Authority said on Monday it had approved a short-form prospectus from Renaissance Capital (Kenya) for a global depositary receipt program, "enabling eligible Kenyan investors to participate in the initial public offering of Dangote Petroleum Refinery & Petrochemicals." Renaissance Capital Kenya will collect investors' money under custodial arrangements and route it through Renaissance Capital Africa, which is licensed in Nigeria to apply in the offer.
Once the IPO closes on Oct. 13 and allocations are confirmed, the Kenyan bank will structure GDRs representing the shares and seek their listing on the Nairobi Securities Exchange.
The listing is not yet certain. The CMA said it depends on approval from Nigeria's Securities and Exchange Commission, on a successful fundraise and on enough shares being allocated to back the receipts. It is the first transaction since Kenya published its policy guidance on GDRs and GDNs, and the regulator framed it as a test of Nairobi's ambition to be a gateway for cross-border African fundraising.
Seven other firms, among them SBG Securities, Kestrel Capital, Sterling Capital, CPF Capital, Francis Drummond, AXYS Investment Bank and National Bank of Kenya with Access Bank, are also helping clients participate through Nigerian partners.
The timing is tight. Renaissance Capital had expected approval the previous Friday to open a Kenyan sales window from Oct. 5, matching the Nigerian close, Business Daily reported. The approval arrived on the Monday, leaving eight days to market the offer locally. Dividends, rights and other benefits would pass through to GDR holders, who would carry the same exposure to the refinery and to the naira as a direct shareholder in Lagos.
The Nigerian offer is 4.1 billion shares at N525 ($0.40) each, seeking N2.15 trillion with a 30% upsize option that could lift the raise to about $2.1 billion; $400 million is underwritten by the lead advisers. Dangote has said demand has been "enormous," and the group has pitched the sale at 10 million retail investors in a country with 2.7 million. Kenya adds a second retail market on a continent where the refinery already sells fuel.
The CMA was careful about one thing. The Kenyan route is into the Nigerian refinery only. It is not an offer in the $16 billion Lamu plant Dangote broke ground on last Wednesday with President William Ruto, in which regional governments have been offered a 30% stake and which Ruto has said will list in Nairobi in its own right. Investors buying the GDRs are buying Lekki, not Lamu.
That distinction matters because the two are being sold on the same story. Dangote toured Ruto through the Lagos refinery on Sept. 25 to show him what Lamu will copy; Kenyan investors are now being invited to own a piece of the original while the copy is still a construction site. The regulator's approval notice ended with the standard warning that it is not a recommendation to invest. The eight-day window will show whether Kenyan savers treat it as one.
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