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Aliko Dangote's oil refinery has drawn about $1 billion in share applications from African pension funds, with South Africa's state-owned Public Investment Corp. and Nigerian pension fund administrators bidding for a large slice of the continent's biggest initial public offering.
The two groups applied for about R16.85 billion ($1 billion) of shares in Dangote Petroleum Refinery & Petrochemicals FZE, according to people familiar with the matter. The PIC alone asked for about R8.43 billion ($508 million) of stock.
The PIC manages almost R3.7 trillion ($220 billion) in assets, including the pensions of South African government workers, and is Africa's largest money manager.
Dangote may sell part of his own stake to meet the demand, the people said. He will keep control of the refinery after the listing.
Three times the target
The pension fund orders sit inside a much larger book. The offer, which closed on Oct. 27, drew about ₦5.85 trillion ($4.3 billion) in applications from nearly 3.8 million investors, close to three times what the refinery set out to raise.
The company offered about 4.1 billion ordinary shares at ₦525 each, seeking about ₦2.15 trillion ($1.6 billion). It is now expected to use a 30% upsize option approved by the Securities and Exchange Commission, which would lift the sale to about $2.08 billion. Even at that size, most of the money will be returned to applicants. The offer values the refinery at close to $50 billion.
Retail buyers made up the bulk of applicants, with about 3.2 million people, or 84% of subscribers, putting in for small amounts. Most of the money, however, came from large institutional orders.
Nigerian billionaire Femi Otedola, chairman of First HoldCo Plc, has also said he plans to invest $100 million in the offer. Otedola sold his stake in Geregu Power Plc earlier this year to prepare for the listing, and during a visit to the refinery in May asked Dangote to set aside $100 million of shares for him. "I have consistently appealed for $100mn worth of shares during the private placement," he said at the time.
Allotment comes next
The basis of allotment needs the regulator's approval before the shares begin trading on the Nigerian Exchange. The company has not given dates for either step, and it has not said how much stock the PIC or the Nigerian pension funds will receive. Nigeria's pension regulator gave local fund administrators special approval in May to invest in the offer.
Dangote's biggest bet
The refinery in the Lekki Free Zone near Lagos can process 650,000 barrels of crude a day, making it the world's largest single-train refinery. Dangote, 69, spent about $20 billion building it and plans to expand capacity to 1.4 million barrels a day.
Dangote built his fortune in cement, sugar and flour before moving into fertilizer and oil refining. He controls Dangote Cement Plc, Africa's biggest cement maker. Forbes and Bloomberg both rank him as Africa's richest person.
Figures were converted at R16.6 and ₦1,365 to the dollar.
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