Nigerian billionaire Aliko Dangote puts small investors first in refinery IPO

Nigerian billionaire Aliko Dangote said investors who apply for ₦50,000 ($37.55) or less of stock in his oil refinery's initial public offering will be given priority when shares are allotted, a pledge aimed at the small savers his company has courted since the sale opened last month.

"We will prioritise people with ₦50,000 and below," Dangote said in Port Harcourt, the oil hub in southern Nigeria's Rivers State, at the last stop of the refinery's nationwide IPO roadshow, according to a Dangote Group statement issued on Wednesday and reported by Nigerian Tribune and New Telegraph.

At the offer price of ₦525 a share, ₦50,000 buys 95 shares. The minimum application is 10 shares, or ₦5,250.

Dangote, 69, the founder and president of Dangote Group and Africa's richest person, told the audience that African and international investors had already committed large sums to the refinery. "Now it is time for Nigerians to invest in themselves," he said. He urged buyers to take a long-term view of the stock.

The pledge sharpens a promise Dangote made when the offer opened on Sept. 14. "If the offer is oversubscribed, retail and small investors will receive priority consideration," he said at the time, adding that the company wanted to make sure "ordinary Nigerians are not crowded out by large subscriptions." The refinery has said it is aiming for at least 10 million shareholders across Nigeria and the rest of Africa.

States and charity buy in

The small-investor push has drawn in state governments and Dangote's own charity. The Yobe state government said this week that Governor Mai Mala Buni had approved ₦230.62 million ($173,177) to buy 10 shares each for 43,928 vulnerable women in the northeastern state, including widows, women with disabilities and women from households displaced by the Boko Haram insurgency, according to a statement from Mohammed Goje, secretary to the state government, reported by Daily Trust and Nigerian Tribune.

The Aliko Dangote Foundation will match the purchase share for share under a ₦40 billion ($30 million) program it set up alongside the IPO. The program gives 10 free shares to eligible tertiary students and vulnerable women who buy the minimum 10, for up to 5 million students and 2 million women. Kwara State in central Nigeria has said it will use the same scheme to buy shares for female teachers in its public schools.

Speakers at the Port Harcourt event included Bismarck Rewane, a Lagos economist and chief executive of Financial Derivatives Co., and Muda Yusuf, an economist who heads the Centre for the Promotion of Private Enterprise. Yusuf said the refinery's effects would reach petrochemicals, packaging, manufacturing and logistics, and called for consistent government policy to keep investors confident, according to New Telegraph.

The offer

Dangote Petroleum Refinery and Petrochemicals FZE is selling 4.1 billion shares at ₦525 each to raise about ₦2.15 trillion ($1.6 billion), the largest IPO in Nigeria's history. The subscription period was extended this week to Oct. 27 with the approval of the Securities and Exchange Commission. The refinery near Lagos processes about 700,000 barrels of crude a day, and the company plans to use the proceeds to help double capacity to 1.4 million barrels a day.

The statement did not say how the priority allotment would work in practice or what share of the offer would be reserved for applicants under the ₦50,000 threshold.