Nigerian billionaire Aliko Dangote’s refinery IPO opens to Uganda’s wealthy investors

Uganda has cleared its wealthy and professional investors to buy into the initial public offering of Aliko Dangote’s oil refinery in Nigeria, the second East African country to open the $1.6 billion share sale to local investors in a week.

Uganda’s Capital Markets Authority approved the marketing of the offer in a notice dated Oct. 6, after an application by Stanbic IBTC Capital on behalf of Dangote Petroleum Refinery and Petrochemicals. The regulator limited participation to high-net-worth individuals and professional investors and barred the offer from being promoted to the general public through mass advertising. SBG Securities Uganda will handle the offer, which closes on Oct. 13.

Kenya’s Capital Markets Authority approved a route for Kenyan investors on Oct. 5, allowing them to buy into the IPO through global depositary receipts listed in Nairobi.

Kenyan brokers cut the entry price

Buying through the depositary receipts requires a minimum of 2,000 units at Sh53.50 each, or Sh107,000 before fees, Business Daily reported. That has led local stockbrokers to compete for smaller investors by lowering their own minimums. Kestrel Capital, one of seven firms cleared to help Kenyans access the offer, has set no minimum and charges no processing fee because its clients’ shares will sit in a single account in Nigeria.

“We have not set a minimum investment threshold or processing fee as shares ordered by our clients will sit in an omnibus trading account in Nigeria,” said Francis Mwangi, Kestrel’s chief executive.

In Nigeria, the shares are priced at ₦525 each, with a minimum order of 10 shares, or ₦5,250, about $4. Dangote has billed the sale as a “people’s IPO” and says he hopes to attract as many as 10 million retail investors. The money will help fund an expansion that would double the refinery’s capacity to 1.4 million barrels a day.

Not every analyst is convinced. GTI Research put the shares’ intrinsic value at ₦493, below the offer price, and called the IPO fully valued.

A cheaper diesel price

Separately, the refinery cut its diesel price by ₦80 a liter on Wednesday, lowering its gantry price to ₦1,700 from ₦1,780, a reduction of about 4.5%. It is the refinery’s second diesel price cut in a month and brings its price close to the cost of importing diesel, which the Major Energies Marketers Association of Nigeria estimated at ₦1,696.40 a liter on Oct. 2.

The cut follows a fall in global crude prices and is expected to bring some relief to manufacturers and businesses that rely on diesel to power generators.