The Chief Executive Officer, Dangote Group, Aliko Dangote has confirmed that Abu Dhabi National Oil Company and other strategic investors are interested in taking stakes in the Dangote Petroleum Refinery, but declined to disclose details of the potential investments because of non-disclosure agreements.
Dangote spoke with journalists in Lagos on Monday after a signing event connected to the refinery’s planned share offering, where he was asked to confirm reports that ADNOC was seeking a stake in the facility.
He said the refinery’s share offering was not “prompted by the current Middle East crisis or other temporary market conditions, insisting that its financial projections were based on normal market conditions.”
Asked specifically whether ADNOC was joining as an investor and whether other strategic investors were also seeking stakes, Dangote said the company had “agreements with several parties but could not disclose details.”
“I don’t want to—you know, there is what you call an NDA, you know, non-disclosure agreement. So, we have agreements with other people; it’s not only ADNOC, other people too. They are very, very interested.
“There are other governments too; they have invested and they are also investing more money, you know,” he said.
Dangote said the level of interest in the refinery had surprised the company, citing demand recorded during an earlier offer to private investors.
“So, the investment really, like what I said, it is actually shocking to us how people are very, very interested in investing in this, you know, refinery.
“And it has shown: when we wanted to sell only $1 billion worth of shares to our private investors, and you know, we got 3.7 times the demand!
“What was paid into our accounts was 3.7 billion instead of 1 billion, and we had to be forced to take $2.5 billion, and we returned 1.2 billion out there,” he noted.
He said the demand could be even stronger when the current offer is opened to investors.
Dangote stated, “So, even this one, I’m sure if we are to open for two days and close, the number of shares we want to sell will be all sold out.”
Responding to a question about whether the refinery’s current profitability would be sustained after temporary geopolitical disruptions ease, Dangote said the company’s calculations were based on normal market conditions.
“Okay, well, the refinery, based on the numbers that, you know, we have that have actually come into the market, okay, this IPO we started long time, so it did not start because of the war in the Middle East, no.
“Our own basis of calculation is based on normal days. When I say normal days, before the Middle Eastern crisis. What money can we make when we refine oil? And that is why we actually now sat down and we did our numbers, and we see that, no, it’s good for us to invite other people,” he declared.
Dangote said the company did not intend to build its business model around temporary crises.
The businessman noted, “Of course, Middle Eastern crisis, the crisis of Ukraine-Russia, it’s not going to go on forever; it will stop one day.
“So, you cannot base your business based on that. You know, we don’t base our business based on crisis. No, we base the businesses based on a normal trend. Okay, we don’t go and base it. Whatever that we have over and above, that is icing on the cake. That’s what we are checking.”
He said the refinery was intended as a long-term investment.
“So, we didn’t really say, “Oh no, no, there is a crisis,” because if you base it on that, what about tomorrow when they settle all these issues? Then it means that we are not going to be able to satisfy our own shareholders.
“This is a lifetime investment. This refinery is not about 10 years, 20, 30, or 50 years; it will actually outlive the whole of us here.
“It should be running for the next 50, 60, 70 years, and I don’t believe if there’s any one of us here that will live in the next 70 years,” he concluded.
IPO not for fund raising
Chief Executive Officer, Dangote Group, Aliko Dangote is not aimed at raising funds but at giving more Africans an opportunity to own a stake in the business.
Dangote also explained the rationale behind opening ownership to investors across Africa and beyond.
He said the refinery had a strong free cash flow and that the company had already raised substantial funds through bonds and private placements.
Dangote said the company was targeting 10 million shareholders from across Africa and other parts of the world.
“We are not, you know—I’ve said that in my speech—it’s not really about raising funds. We have a very good free cash flow in the company, and we have raised quite a lot of money.
“We’ve done bonds, we’ve done private placement, and the cash generation in the refinery business today is very good.
“So, it’s not about raising money. It’s about getting our own, you know, Africans generally to be part and parcel of this, you know, refinery. It’s not what is even happening today; it’s what will happen in the next three years. This will be the biggest company in Africa, and I think every African should have a stake in it.
“It doesn’t matter; if you can afford ten shares, you buy ten. If you can afford one million, you can buy one million. But we want to get as many Africans as possible,” the billionaire businessman stated.
Dangote said the company could have offered a larger portion of the refinery if its objective was solely to raise funds.
“So, that’s what it is. So, it’s not really about raising money. We are not saying that, no, if we want to raise money, we know how to raise. And that’s why we have a limit. If not, we would have actually offered 20% of the company.
“It’s about getting people all involved. We are targeting 10 million shareholders from all over Africa and maybe other parts of the world,” he clarified.
10m Nigerian, African shareholders
Explaining the rationale for opening ownership to ordinary Nigerians and other Africans, Dangote said the initiative was also about creating a legacy and spreading the benefits of the businesses beyond their founders.
Dangote stated, “Well, the reason behind that is actually for us, major part of our own job is not about really even making money; it’s about legacy. It’s about trying to say, “Okay, fine. How do we actually make sure that we send down the prosperity down there?”
“Where now, yes, maybe you are a salary earner, and you want to make sure that you have investment to secure the future of your children, school fees, or whatever. We are saying that, yes, come. I believe you have seen what we have done; we have demonstrated. And we have the best brains, so we are doing what is great. We are running businesses that are very, very profitable. And when you now actually join us in this trajectory, you are not going to be left behind.”
Dangote said he wanted the investment to create wealth for shareholders in a way similar to the growth experienced by early investors in major global companies.
“I want it to be like the likes of this Amazon and co., where somebody will buy a share worth $10,000, after a couple of years, it’s going to be worth millions. That’s how you create a lot of millionaires by them not running their own businesses, by them investing in what we have created.
“And it’s not only the refinery; we have the fertilizer—we are creating big corporations where we don’t want to be the only people enjoying. We want to spread this enjoyment to the rest of Africans,” Dangote explained.
He also said the initiative would provide opportunities for African entrepreneurs to invest in businesses involved in industrialising the continent.
“Secondly, we are also trying to make sure to make African entrepreneurs, like what I said in my speech, to be able to come and join us in this journey, where now they come and invest. We have a lot of things that we are doing. But most of our raw materials, they’ve been taken abroad for processing.
“We want to process; we want to industrialize Africa, and by industrializing Africa, it must be done by we, the Africans, not by any other party,” he concluded.
Source: punchng.com
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