Sh492.50 in Lagos, Sh107,000 in Nairobi: The Same Dangote Share
“We would like everybody to participate in the IPO.”
Stanley Kariuki, CEO of Renaissance Capital Kenya
He said it at the end of September, the week Aliko Dangote stood in the offices of the Nairobi Securities Exchange and pitched East African institutional investors on a piece of Africa’s largest refinery.
In Lagos, everybody means 10 shares at ₦525 each.
Sh492.50.
On Monday, Kenya’s Capital Markets Authority approved the route that carries those shares to Nairobi. The terms set the minimum at 2,000 receipts, at Sh53.50 each.
Sh107,000.
Same refinery. Same offer. An entry ticket about 217 times higher in Nairobi than in Lagos.
The pipe
Set the minimum aside for a moment, because something genuinely new got built this week.
Dangote Petroleum Refinery is selling 4.1 billion shares for about $1.6 billion, the largest share sale Africa has seen. The offer was approved in Lagos and could not be marketed in Kenya. Until Monday, a Kenyan who wanted in had to go through 1 of 7 local firms with Nigerian partners, at minimums as high as $2,000.
The new route is a global depositary receipt. Follow the shilling:
- A Kenyan investor places an order with a licensed broker.
- Renaissance Capital Kenya passes it to Renaissance in Nigeria, which subscribes in the IPO.
- Stanbic holds the allotted shares in custody in Lagos.
- Stanbic Bank Kenya issues 1 receipt for every share it holds.
- The receipts list on the NSE and settle in shillings through Kenya’s central depository.
Kenya wrote the rules for this in 2017. Nobody used them until Dangote. Allotment is set for 11 November and trading for 8 December, once Nigeria’s SEC approves the listing.
The receipt is not priced at cost either: Sh53.50 in Nairobi for a share that sells for Sh49.25 in Lagos.
Uganda opened its own door within days. It is narrower still: professional and high-net-worth investors only.
The ambition
Dangote is not chasing institutions alone. The refinery’s CEO, David Bird, has set a target of 10 million retail investors, more than double the 4.5 million who bought into Saudi Aramco in 2019. The money is meant to take the refinery from 700,000 barrels a day to 1.4 million by 2029, which the company says would make it the largest in the world.
“Our job is to deepen African capital markets, whatever it takes to have this shared prosperity.”
Aliko Dangote
The 2 East African doors that opened this week are both priced for people who already have money.
Business Daily asked Renaissance about the minimum. It did not immediately respond.
The gap
The hard part is done. The custody chain works, the receipts settle in shillings, and a regulator has approved the structure once. The next African company that wants Kenyan savers does not have to invent the route.
What nobody has built is the small ticket.
Sh107,000 is 1 order. It is also 200 orders of Sh535.
Kenyans already pool small savings into money market funds every day. A product that gathers savers into the 2,000-receipt minimum, holds the receipts and passes the gains back would sell the Lagos price in Nairobi. It would work for Dangote in December, and for every African listing that follows Dangote down the same pipe.
The pipe from Lagos to Nairobi is built. Its tap is set at Sh107,000.
Whoever fits a smaller one gets everyone still standing at the door.