The stock market flotation of the Dangote refinery, which could raise about 2,150 billion naira, or 1.6 billion dollars at the exchange rate set at launch, highlights regulatory obstacles to cross-border investment in Africa, just days before its scheduled closing on 13 October.
The offer covers 4.1 billion ordinary shares offered at 525 naira each, with a minimum of ten shares. It opened on 14 September after approval from Nigeria's Securities and Exchange Commission. The sale is registered as a public offer in Nigeria, but that authorisation does not automatically extend to other jurisdictions on the continent.
Investors based outside Nigeria must therefore comply with the rules of their own countries or use authorised channels. The prospectus listed 53 intermediaries accessible in Nigeria, compared with only two routes highlighted for other African investors, Ecobank and SBG Securities, according to Reuters. This difference limits the practical reach of the pan-African ambition declared by the issuer.
Kenya approved a simplified prospectus on 5 October allowing eligible investors to take part through an international depositary receipt. The creation of these securities remains, however, conditional on the success of the offer, the allocation of shares and the authorisations needed for a listing in Nairobi. Uganda has also authorised its investors to access the transaction.
These national openings do not yet amount to a continental stock market passport. Marketing rules, client identification, custody of securities, settlement of transactions and currency conversion continue to vary from one market to another. Commercial integration driven by the African Continental Free Trade Area does not remove these requirements specific to capital markets.
The refinery aims to attract ten million retail investors, its chief executive David Bird said on 6 October. This target exceeds the 4.5 million retail subscribers cited as a benchmark for the Saudi Aramco IPO. It is a participation target, not a number of subscriptions already recorded.
If all the shares are subscribed, the transaction could become the largest capital raising ever carried out on the Nigerian market. The final proceeds, the geographic breakdown of investors and the number of shares actually allocated will only be known after the close and publication of the offer results.