The Dangote Petroleum Refinery has said it will wait at least three years before pursuing a foreign stock market listing, as the company seeks to establish a strong production and financial track record that could command a higher valuation overseas.
The refinery’s Chief Executive Officer, David Bird, disclosed this in an interview with Reuters on Friday, while confirming that preparations for its planned October initial public offering in Nigeria were on schedule.
Bird said the company would first build at least three years of proven operational and financial performance before considering an international listing.
The move means the $20bn refinery, owned by Africa’s richest man, Aliko Dangote, will initially focus on the Nigerian capital market, with the planned domestic IPO designed to broaden local ownership.
“Dangote Petroleum Refinery’s planned October IPO, which could become Africa’s largest, is designed to let Nigerians share in the company’s growth, adding that a foreign listing is at least three years away. We really want to drive participation. The mandate of the IPO was to be the people’s IPO,” Bird said.
The refinery has applied to the Securities and Exchange Commission for an IPO that could raise as much as $5bn, according to a source familiar with the matter cited by Reuters. Bird, however, declined to comment on the proposed size of the offering or the company’s valuation.
He said waiting for three years of proven production and financial performance before seeking a foreign listing could strengthen the company’s position and support a better valuation when it eventually approaches international investors.
The planned IPO follows a $2.5bn private placement completed in July, which valued the refinery at about $40bn. Africa Finance Corporation said the transaction, which it led alongside strategic investors, was 3.7 times oversubscribed and attracted strong demand from African and international institutional investors.
Bird said investor interest during the pre-marketing exercise and private placement had been strong, adding that preparations for the IPO remained on schedule.
The decision to delay an overseas listing comes as the refinery rapidly expands its footprint in international fuel markets. Bird said the facility became Europe’s largest supplier of jet fuel in June and July as buyers sought alternative supplies amid disruptions linked to the Iran war.
The company is also targeting a major capacity expansion. Bird said it plans to increase refining capacity from 650,000 barrels per day to 1.4 million barrels per day within three years.
The expansion will be funded partly through the IPO and debt, with Bird saying it would cost substantially less than the approximately $20bn spent on the original refinery.
He said the refinery had advantages over comparable US refining assets because of its access to local crude supplies, strong domestic demand and integrated operations.
“Africa remains structurally short of refined fuels and petrochemicals, creating significant room for growth,” Bird said.
The refinery currently supplies most of Nigeria’s petrol and diesel demand and all of its jet fuel needs.
The planned foreign listing would therefore come after the company has established a longer operating history, potentially giving international investors greater visibility into its earnings, production capacity and growth prospects.