Could Dangote's Stock Listing Transform African Investing?

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In nineteen seventy seven, dearbiun Banni's firm, Reliance's ambition had outgrown the capitol it could get from traditional bank loans, and so he turned to ordinary Indian investors and transformed equity culture in South Asia. Reliance Textiles as it was known, then offered two point eight million shares at ten rupee per share and then convinced thousands of ordinary Indians to invest.

Reliance has grown from a small startup to becoming one of the largest and the most admired companies in the world. We have established many records in this period that has made India and our shareholders prout.

Now in twenty twenty six, another tycoon is looking to make similar waves. A Laji Aliko Dangote is Africa's richest person and many see him as an industrialist in the mold of Ambani Alico.

Danote is an industrialist.

Really, we compared him to John D. Rockefeller.

His oil refinery in Legos is the continent's largest, processing six hundred and fifty thousand barrels of crude per day, and as prices surge as a result of the war in Iran, Dangote's plant is in huge demand. Now. He wants to list part of the refinery on the Nigerian stock market and wants to see investment from within Africa. So could dan Gote's IPO transform investment culture in Africa

Surprisingly, I'm super excited, super excited.

Jennifer, Yeah, it's such a pleasure to have you. There's so much to unpack, especially when we think about these two tycoons. Maybe, though, in Duka, we just start with you because you have been doing quite a lot of extensive reporting on Dan Gote for a number of years. You were just in DC doing some reporting on him, speaking with him about his plans to sell shares of his refinery in an Ibo. There's still a lot of questions about what this could look like when it could happen.

So much from him at the moment. Also give you a context of what they we're talking about him. We're talking about the largest refinery in Africa and in continental Europe can process in Aust fifty thousand barers of cool. But they construction started in twenty seventeen in the body stided production in twenty fourteen.

And it's so sophisticated.

Yeah, And when he speak to experts in the refining business, the marveler Dan what they was able to achieve with a refinery in labels.

Now to the IP and what we know what he told.

Me from speaking to him twice in DC, he is thinking of listing around ten percent of the refinery primarily in Nigeria, with second releastings in other countries, which he didn't say, but I spoke to other members of his team, and they're looking at South Africa, Ghana, Kenya for those second releastenings.

We know it's going to happen in the second part of the year.

I've had August been mentioned as a month where the refinery is not finally gal to the public. He's not quite clear what the evaluation is because I pressed him on that what the evaluation of the refinery is, and he said they're still working on that, so we don't have that detail at the moment.

You know, I am currently in Nairobia, should say. And I was speaking to Riko d'enote at the Africa We Built summit. The whole discussion was around infrastructure investment, right, and he is the symbol of what that looks like on the continent. I wanted to play this this bit from what we heard from him, which I thought was quite interesting about his comments around the continent relying too much on overseas investment in the past.

We have made a lot of mistakes in the past where we've been relying on foreign investors. The foreign investor will not come without the leadership of domestic investor, so domestic investors must take the risk and start blowing your own continent, not for you to wait for foreign investors.

I wonder when you look at how much he went through to get this refinery off the ground where it's at right now, and now where he's trying to take this IPO, how much of his ambition is around tapping this African investment, especially when you look at this this pan africanism that he's trying to do with this listening.

I mean, he's gone through a lot to get it to where it is now.

Gen As he said, he had issues in his home country in Nigeria, issues recruits apply. I think he's not across all that the refinery is performing at and three percent according to the little then what he says is a pig performance and he's his ambition to expanding to the rest of the of the continent.

I think it's part of his white ambition.

To take his conglomerate to a hundred billion dollar business by in the next four years. He plans to invest forty billion dollars across several African countries and he sees this IPO, you know, as.

A way of doing that.

And he makes the point about how you know, Africans need to invest you know, in not just his company, but companies on the continent, and he taps into what you hear the multilatal organizations here talk about the financial institutions like the AFC for instance, and they've talked about the four trillion dollars that's available to pension phones you know, banks, you know, and and other surveillance institutions on the continent and how that can be can be plowed into building

You know, on the plans that he has.

Spread across the continent, he wants to build the refinery to process copper, and Zambia he wants to build pipelines.

In Namibia.

You know, he wants to get into the power sector in Congo.

He has plans for Zimbabwe.

So I think the IPO is almost following Dangle expansion in several conceptors across the continent.

And Arjie, can you jump in here just to piggy back off of what in Duka is saying. Do you get a sense that there is appetite for this IPO, I mean, separate from Dangote himself. I mean, the Nigerian stock market has had a pretty good twenty twenty six so that could provide the tail whend that he needs just going into this listing.

Yeah, Jennifer, you are quite right about that. In ten dollar terms, the Nigerian benchmark Index is actually among the world's top performers this year. And obviously when investors see such gains that itself generates a lot of interest. Just look at India, where the market had risen about for straight eight years until twenty twenty five. You know, companies there raised twenty five billion dollars in IPOs just last year. In Nigeria, the last major IPO was seven years ago.

You know.

But you've been speaking to a lot of investors and brokers. In fact, just this week we were speaking to them in Legos. What we are hearing is that there's a lot of interest building up about the Denote Refinery.

IPO.

Duka mentioned some of the details of the share sale, but there are a lot of questions yet to be answered for what could become Africa's biggest initial sare sale.

If you look at what.

The regulators have done to entice retail investors, they recently updated capital requirements to encourage digital subbrokers to reach more users. Another data point that may interest Dungote, you know as he plans his IPO. In twenty twenty one, just eighteen percent of Nigerian adults used a formal financial account to save according to the World Bank. That is that figure jumped to about forty three percent in twenty twenty four, one of the sharpest increases globally. So the question is

List a few of the issues.

Liquidity is extremely low in Nigeria and broadly other markets on the continent except for South Africa. Of course, there is a relatively low trading volume and the key stumbling blog is also lack of investor education.

All right, stick with me, Argent and Duka.

We're going to take a quick break and when we come back, we'll look at the impact and Bonnie's IPO had in India and whether dan Gote potentially could spark something similar in Africa. Later this year, we'll be right back.

Welcome back.

Today, we're digging into the potential IPO from Africa's richest man, Elco dan Gote for his Legos oil refinery. At the top of the program, I was comparing dan Gote to the Indian entrepreneur and Banni and his IPO of reliance back in nineteen seventy seven. Argent, ghosh And and Dukajen are still with me. Arjit, you were speaking a bit before the break about some of the challenges that could

Jennifer, Just to give you a historical perspective, when I was growing up in New Delhi in the late nineteen seventies and through the nineteen eighties, I used to see my father bring home these forms and spend quite some time in filling them. Remember there were no computers to help at that point of time. These were application forms for IPOs. You know, Reliance's IPO was really an inflection

Wow. So potentially we could see a similar playbook from Dangote. I mean, is that sort of Could this be a similar moment for Nigeria and for the continent? Then?

You know, both Amberness and Dungote saw an opportunity in building industries based on import substitution and they made their fortunes in heavily regulated markets. They benefited from protectionist industrial policies. You know, Dunggote started in cement, Amberni started in textiles, but both have been disruptors.

You know.

Critics of both groups have similar gripes. They have attacked them as shrewd tycoons who have used their political connections to secure an advantage over competitors, which they have both denied. The Banis moved into refining in the late nineteen nineties and became really the supplier of fuel to the world. Dungote who plans to double his capacity and it could match the massive relions refinery in Chamnager in Gujarat, he

But then the government needs to remove.

Obstacles for businesses as well. In Nigeria. We did something called the Bloombergs Investors Guide to Africa, which showed that Nigeria is riskier than many countries on the continent. Ivory Coast, Kenya and Egypt are less risky for investors, for instance.

And he actually brought that up about consistency and policy when we were speaking, and that's what he needs in order to continue to invest across the continent. So let's just bring it back to the IPO because that's what we started with and really that could be a seminal moment for Nigeria and also for Dangote himself. This year, I again tried to get some more out of Aliko dan Gote about what his plans are for his eventual IPO. Here's what he told me earlier this week.

No, it's going to actually deep in the market, and we're saying that all Africans should invest and will be paying dividends in dullas.

Arjit, let's just go to you.

What are you going to be watching out for with this eventual IPO and what could potentially be a few of the obstacles to actually getting this off the ground.

Yeah, so I think the key thing for us to watch out for is how much is Dangote going to raise, what will be the evaluation of the share sale, when will he actually go about selling the IPOs? So those are the questions that we'll be looking to ask do got if he managed to speak to him, and of course speaking to others in the market as well. We will also be watching out for if this kind of triggers other companies to come forward with IPOs. We'll be

And thanks again so much to Argic Ghost, our managing editor for Africa and Duka or Ginmo, our reporters in Abuja for joining us this week on the podcast. You can find more of our coverage of Aliko dan Gote on Bloomberg platforms. Now here's some of the other stories we've been following across the region this week. South African farming group Keru Pistachios is ramping up output to capitalize on surging prices and compete with the world's biggest producers.