Dangote Refinery IPO: Uwaleke, Ndanusa, Teriba Raise Stakes for Investors, Say Offer Can Cut Reliance on Debt, Others

• Declare refinery listing could deepen equity market, mobilise domestic savings, reshape financing of productive assets 

• Urge investors to test earnings, cash flows, leverage, governance before subscribing 

• Challenge government to unlock value in public assets while preparing for global energy transition 

• Rwanda to open Dangote IPO to local investors

James Emejo in Abuja

Financial and economic analysts yesterday described the Dangote Petroleum Refinery Initial Public Offering (IPO) as a test of the country’s capital-market discipline, an opportunity to broaden ownership of strategic assets, and a pointer to how the country could finance development beyond mounting reliance on debt.

Analysts cautioned, however, that the IPO’s significance would ultimately depend on investment discipline, sound governance, and the ability to demonstrate sustainable returns.

That was as Capital Markets Authority (CMA) of Rwanda announced that it had commenced arrangements to facilitate the participation of Rwandan investors in the IPO of Dangote Petroleum Refinery, signalling growing regional interest in the landmark Nigerian capital market offering.

The Rwandan capital market regulator, in a public announcement, said it was working with relevant stakeholders to establish the arrangements that would enable investors in the East African country to participate in the refinery’s share offering.

In separate presentations, Professor of Capital Market/pioneer President, Capital Market Academics of Nigeria, Professor Uche Uwaleke, and renowned economists – Dr. Suleyman Ndanusa, and Dr. Ayo Teriba — said the proposed listing could broaden ownership of one of the country’s most strategic industrial assets, mobilise domestic savings, and provide a template for financing productive assets beyond the growing dependence on debt.

However, the experts approached the proposed transaction from different perspectives.

IPO Could Deepen Market, Mobilise Savings

Uwaleke described the proposed listing as an investment story, a capital-market development opportunity, and an important component of Nigeria’s broader economic transformation.

He said the IPO could give investors access to one of the country’s most significant industrial assets while creating a wider pool of domestic ownership and strengthening the capacity of the capital market to mobilise substantial savings for productive investment.

According to him, the listing could increase market capitalisation, expand participation by retail and institutional investors, and create a major investible asset for pension funds and asset managers.

It could also broaden Nigerian ownership of a strategic segment of the petroleum value chain, he said.

Beyond the capital market, Uwaleke said the refinery had the potential to contribute significantly to import substitution, refined-product exports, foreign-exchange earnings, employment generation, supplier development, petrochemicals, and wider industrial linkages.

He added that the project could strengthen Nigeria’s position in regional energy trade while creating multiple revenue channels across refining, storage, logistics, power, petrochemicals and exports.

However, the former Imo State Commissioner for Finance stressed that the scale and strategic importance of the refinery should not obscure the risks investors would have to consider.

He identified valuation, crude supply, refining margins, execution of expansion plans, foreign exchange, regulation, operational performance and post-listing liquidity among the issues that could affect the investment.

He pointed out that the prospectus and the underlying fundamentals should form the basis of investment decisions rather than the size or national importance of the refinery alone.

Test Earnings, Cash Flow, Leverage

Ndanusa drew a distinction between acknowledging the refinery’s industrial achievement and determining whether its shares constitute an appropriate investment.

According to him, the scale of the project should not substitute for rigorous financial analysis by prospective subscribers.

He identified valuation as the first major test, stating that the offer price should be supported by durable earnings, credible cash flows, and transparent assumptions.

A period of strong refining margins or impressive short-term earnings, he cautioned, should not automatically be regarded as evidence of sustainable full-cycle earnings capacity.

Ndanusa said prospective investors should expect the final offer document to provide adequate information on the valuation methodology, comparable companies, key assumptions and the sensitivity of the business to changes in market conditions.

He also raised questions about the financing of the refinery’s expansion programme and the implications of additional capital expenditure for shareholders.

Investors, he said, would need clarity on whether expansion would be funded through IPO proceeds, retained earnings, operating cash flow, or additional borrowing, as well as the implications for leverage, interest obligations, and debt-service capacity.

He said dividend expectations should be assessed against actual cash generation.

He explained that a company undertaking substantial expansion could record higher accounting profits while simultaneously requiring significant cash for capital expenditure, debt servicing, and working capital.

Ndanusa also placed corporate governance at the centre of the investment debate, particularly in view of the ownership structure that could remain after the listing.

He stressed the importance of independent directors, effective board committees, transparent related-party transactions, adequate conflict-of-interest safeguards, timely disclosures, and equal treatment of minority shareholders.

He urged consistency in the information contained in the final prospectus, warning that discrepancies in timelines, figures or assumptions could undermine investor confidence.

He called for the refinery’s industrial success to be translated into an investment proposition capable of withstanding scrutiny on the basis of evidence, governance and price discipline.

Use IPO to Reduce Debt Dependence

For his part, Teriba stressed that the IPO could offer Nigeria a practical lesson in financing large-scale productive assets through a combination of instruments rather than excessive dependence on debt.

He stated that Dangote had over time deployed borrowing, debt instruments, private placements, and other forms of capital before moving towards public equity.

He said the progression underscored the importance of a diversified financing mix.

The lesson, according to him, is particularly relevant to government, given Nigeria’s continued reliance on borrowing, despite its ownership of substantial commercial, infrastructural, and other economic assets.

Rather than relying predominantly on future public revenues to support additional borrowing, Teriba said government should examine how viable assets on its balance sheet could be used to mobilise capital.

He stressed that such an approach should not amount to indiscriminate privatisation.

Teriba said government could retain strategic or majority ownership while bringing in minority investors, using concessions and public-private partnerships, establishing special-purpose vehicles or structuring securities around commercially viable assets and identifiable cash flows.

He said potential areas could include energy infrastructure, electricity assets, transport infrastructure, airport terminals, rail projects, commercially viable roads, and government-owned enterprises with identifiable revenue streams.

Teriba explained that the underlying principle was for the country to move from relying largely on financing against its income stream to also mobilising the value of its balance sheet.

He pointed out that the Dangote transaction could demonstrate how domestic capital markets could connect savings with productive assets while reducing pressure for debt-led financing.

The proposed listing could also broaden the ownership structure of a strategic industrial asset, he said.

Teriba stated that Nigerians had historically participated in the ownership of major banks, telecommunications companies, and manufacturing firms through the capital market.

The refinery IPO, he said, could extend that model into large-scale petroleum refining by enabling retail investors, pension funds, and other domestic institutions to participate in the ownership of productive infrastructure.

But he stressed that wider ownership must be accompanied by investor protection.

He stated that greater participation would have limited value if retail and minority investors lacked access to clear information or if governance arrangements failed to adequately protect their interests.

Broader Energy Transition Question

Teriba also stated that the significance of the refinery should be assessed against the changing global energy landscape.

Nigeria had traditionally exported crude oil while importing substantial quantities of refined petroleum products. Increased domestic refining capacity could alter that equation through import substitution, refined-product exports, foreign-exchange earnings, and increased domestic industrial activity.

The refinery could also support petrochemicals, logistics, manufacturing, and other businesses through backward and forward linkages.

However, Teriba cautioned that the strategic importance of the project should not be confined to the current hydrocarbon economy.

He said the global energy system was gradually moving towards renewables, electrification, and lower-carbon technologies, creating a strategic question for both Dangote and Nigeria about the long-term concentration of investment in hydrocarbons.

The issue, he stressed, was not whether refining would immediately become obsolete or unprofitable, but whether a company or country could build a long-term strategy around hydrocarbons without simultaneously developing a credible position in emerging energy industries.

For Dangote, Teriba suggested that the stronger long-term proposition would involve evolving from being identified principally as a major refining company into a broader African energy company, with exposure to electricity, solar, energy storage, alternative fuels, and electric mobility alongside its hydrocarbon businesses.

He said Nigeria faced a similar challenge at the national level.

Rather than pursuing only a petroleum strategy, the country should develop an integrated energy portfolio encompassing oil, gas, refining and petrochemicals alongside electricity, renewables, storage, and other emerging technologies, he added.

The implication, according to him, is not the abandonment of hydrocarbons but diversification of the energy portfolio.

Hydrocarbons could continue to generate revenue, support exports, and underpin industrial activity, while Nigeria used its current strengths to build capabilities in energy industries expected to become increasingly important.

Growing Regional Interest

Meanwhile, the Rwandan interest potentially broadens the investor base for the Dangote Refinery IPO beyond Nigeria, as interest in the offering extends to investors across the African capital market.

CMA said it had been encouraged by the “strong interest” in opportunities being created through capital markets, adding that details of the arrangements for Rwandan investors are still being finalised.

Pending the completion of the process, interested investors in Rwanda have been directed to register their interest through United Capital Financial Services Rwanda Limited.

The regulator, however, stressed that registering interest should not be interpreted as an actual subscription to the IPO or as a guarantee of share allocation.

It stated, “Registration of interest does not constitute a subscription for, or allocation of, shares.”

CMA added that further information on the modalities for participation would be communicated in due course.

The refinery, located in Lagos, is Africa’s largest single-train refinery and has become a major component of Nigeria’s efforts to strengthen domestic petroleum refining capacity and reduce dependence on imported refined products.

The planned equity offering is also expected to provide an avenue for investors to take exposure to the refinery’s operations while potentially deepening the role of domestic and regional capital markets in financing large-scale productive assets.

CMA said its engagement with relevant stakeholders was ongoing and urged interested investors to await further official communication on the process.

The announcement was signed by Capital Markets Authority, Rwanda, which also directed investors to its official website for regulatory information.