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Aliko Dangote's oil refinery is set to increase the size of its initial public offering to $2.08 billion from $1.6 billion, using the full extra allowance granted by regulators after investors bid for nearly three times the shares on offer, IFR reported on Nov. 12.
The new size is 30% above the base offer, the maximum the Securities and Exchange Commission allowed Dangote Petroleum Refinery & Petrochemicals FZE to keep if demand ran ahead of supply.
The refinery offered about 4.1 billion ordinary shares at ₦525 each, aiming to raise about ₦2.15 trillion. Exercising the full 30% option would lift the sale to about 5.3 billion shares, worth about ₦2.8 trillion at the offer price.
Demand still outstrips supply
The upsizing still leaves most investors short. The offer, which closed on Oct. 27, drew about ₦5.85 trillion ($4.3 billion) in applications for roughly 11.15 billion shares from nearly 3.8 million investors. Even at the larger size, the refinery can fill less than half of the shares sought, and the rest of the money will be returned to applicants.
Investors in Nigeria put in orders worth about $1.9 billion, more than the original target on their own, while international buyers accounted for about $2.1 billion. Applications came from 120 countries, including all 54 African nations.
Dangote had signaled the size of the demand weeks before the books closed. "We have more than reached our target," he said in Gaborone, Botswana, on Oct. 14, adding that interest was "more than three times or four times what we are looking for."
The offer values the refinery at close to $50 billion. Dangote could sell part of his own stake to investors who miss out on shares, though no decision has been made.
Allotment and listing 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.
Retail investors made up the bulk of applicants. About 3.2 million people, or 84% of subscribers, applied for 62.26 million shares worth ₦32.69 billion ($23.9 million), less than 1% of the shares sought. Dangote has said he wants the refinery to have as many as 10 million shareholders.
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 lift capacity to 1.4 million barrels a day by 2030.
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, and will keep a large majority of the refinery after the listing. Forbes and Bloomberg both rank him as Africa's richest person.
Figures were converted at ₦1,365 to the dollar.
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