Aliko Dangote, Africa’s richest man, could see his fortune increase by about $20 billion following the planned initial public offering (IPO) of the Dangote Petroleum Refinery.
Dangote is currently worth an estimated $35.3 billion, according to the Bloomberg Billionaires Index. However, the planned IPO could trigger a significant revaluation of his stake in the refinery and substantially increase his wealth.
Bloomberg currently places the value of the Dangote refinery at about $20 billion, based largely on its construction cost. With Dangote holding a 92.3 per cent stake in the facility, his interest is currently valued at approximately $18.5 billion.
However, investors have already placed a much higher value on the business. In July, a private placement saw about six per cent of the refinery sold for $2.5 billion at 35 cents per share. The transaction implied an equity valuation of approximately $41.7 billion.
If the refinery enters the Nigerian Exchange at a similar valuation, Dangote’s stake could be worth about $38.5 billion. This would potentially push his total fortune to around $55.3 billion, representing an increase of roughly $20 billion.
His wealth could rise further if the refinery commands a higher market valuation. At $45 billion, his stake would be worth about $41.5 billion, potentially taking his total fortune to approximately $58.4 billion. A $50 billion valuation would put his stake at about $46.2 billion and could push his wealth close to $63 billion.
The expected change stems from the way billionaire wealth is calculated. Once the refinery becomes publicly traded, its value would be determined by its market price rather than an estimated value based on construction costs.
The refinery has already taken steps towards the planned IPO. It filed with the Securities and Exchange Commission in August and is targeting a share offering that could raise about $5 billion.
The proposed transaction would rank among Africa’s largest public offerings and would represent a significant portion of the Nigerian Exchange’s total market value, which stood at about $116 billion in early August.
The proceeds are expected to help finance the expansion of the Lekki refinery from its current capacity of 650,000 barrels per day to 1.4 million barrels per day. Funds will also support plans for another refinery in Kenya.
Dangote’s final ownership percentage after the IPO remains an important factor. If the offering involves the sale of some of his existing shares, his stake in the refinery would fall and the potential increase in his wealth would be smaller.
However, if the company raises the funds mainly by issuing new shares, Dangote’s holding would be diluted while the refinery receives the proceeds from the transaction.
The company’s prospectus is expected to provide greater clarity on the structure of the IPO and how much of the business will be offered to investors.
There are also valuation concerns. The $41.7 billion figure implied by the July private placement is higher than the valuations of some listed international refiners with comparable capacity.
Investors will therefore have to determine whether the refinery’s location, export potential, expansion plans and position in Nigeria’s petroleum market justify the premium valuation.
.
