The decision of the chairman of Dangote Group, Aliko Dangote, to sell five per cent to 10 per cent of its stake on the Nigerian Exchange (NGX) Limited within the next year has generated significant interest among Nigerian investors.
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The refinery, currently producing 650,000 barrels per day, targets expansion to 1.4 million barrels per day, positioning itself as a global energy leader and potentially boosting Nigeria’s economic growth.
Dangote, who disclosed this in an interview with S&P Global, said the move will mirror the approach adopted for Dangote Cement and Dangote Sugar Refinery.
He said, “We do not want to keep more than 65 per cent to 70 per cent. The shares would be offered gradually, depending on investor appetite and market depth.”
Capital market stakeholders and investors have described the proposed sale of a ten per cent stake in the Dangote Petroleum Refinery as a pivotal development that is likely to enhance investor confidence, increase transparency, and strengthen Nigeria’s capital market.
The managing director of APT Securities and Funds Limited, Kasimu Kurfi remarked that this proposal signals the company’s intention to list on the Exchange, which is a positive step forward.
He stated that “while it is encouraging to see progress, we must approach the situation with careful consideration. Originally, a 20 per cent stake was offered to the federal government, which Dangote later purchased back five per cent.
“Now, with a proposal for a 10 per cent share on the Exchange, it is essential to ensure that the market is adequately prepared to absorb such an investment.”
He noted that “given the relatively small size of our exchange, valued at less than $60 billion, the refinery alone, without considering market valuation, is estimated at over $20 billion. This potential listing could represent a significant portion, up to 50 per cent of our market. Therefore, the crucial question arises: can our market handle this?”
To address this challenge, Kurfi said, “it is vital to raise awareness and sensitise investors to the opportunities of this development. Effective communication will allow the market to fully appreciate the scale of such an investment.”
He also said that if the refinery opts for a dual listing, as previously suggested, it could be listed on both the Nigerian Exchange and the London Stock Exchange.
“While the local market might face limitations, the international market could offer additional capacity.
“While the move towards this listing is promising, we must be proactive in fostering understanding and enthusiasm in the market to ensure successful uptake of the proposed 10 per cent. With time and effort in market education, we can pave the way for this significant opportunity,” he explained.
The director/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf emphasised that this is a positive step, not only for the Nigerian Exchange but also for the overall economy of Nigeria.
According to Yusuf, listing more companies on the exchange would provide Nigerians with the opportunity to become part owners of key assets like refineries, thereby broadening the stakeholder and ownership base.
“This move is not only beneficial for the Nigerian economy but also for individuals who wish to participate in the ownership of significant enterprises, such as Dangote Refinery.
“By expanding ownership, we can foster a sense of belonging among Nigerians and make investment opportunities more inclusive. This approach could significantly enhance support for major projects like the Dangote refinery.”
The managing director of Globalview Capital Limited, Mr. Aruna Kebira, stated that the potential impact of this development on the economy and the market is likely to be significant.
“While we do not yet have a specific share price, it is important to understand that the market capitalisation will be influenced by the share price multiplied by the number of shares available. This will contribute positively to the overall capitalisation of the company,” he explained.
According to Kebira, it is an exciting time for stakeholders, as the eventual listing of Dangote refinery could be a substantial opportunity for growth and investment in the market.
On its part, the national chairman of New Dimension Shareholders Association, Mr Patrick Ajudua, said the listing of Dangote Refinery on the Nigerian stock market is a good development for investors in the capital market and will have a more positive impact on the Nigerian economy.
“As shareholders, we thank Aliko Dangote for his magnanimous decision to sell 10 per cent stake in the refinery presently with a capacity of 650mbpd and an expansion target of 1.4mbpd. This, if achieved, will make the refinery the biggest in the world, and that in itself will project the positive image of our country, economy and the giant stride that the Nigerian exchange is making in contributing to the development of the economy.
“We appreciate Dangote for always believing in the capital market, for his consistent generosity in rewarding investors by way of dividend and capital appreciation in all his companies listed on the Exchange.
“We believe that investors will position themselves to take up the shares of the Refinery when listed,” Ajudua said.
For the national coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr Moses Igbrude, the listing of Dangote Petroleum Refinery will have a huge positive impact on the Nigerian capital market and will deepen it.
He added that it would be an unprecedented sign that Nigeria’s economic growth is on the right track.
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