Kenyans eye Dangote refinery shares via NSE listing
Kenyan investors could soon buy into the Dangote refinery’s initial public offering (IPO) through the Nairobi Securities Exchange (NSE), under a proposed deal targeting up to $300 million (about Sh38.7 billion) in local participation.
Investment bank Renaissance Capital plans to list global depositary receipts (GDRs) backed by shares in Dangote Petroleum Refinery & Petrochemicals FZE, allowing Kenyans to trade them on the NSE in shillings.
If approved, it would be the first unsponsored inward GDR programme of its kind in Africa.
The proposal was presented to institutional investors at a forum convened by the NSE in Nairobi on Tuesday, attended by Dangote Group president and chief executive Aliko Dangote.
“The proposed programme is expected to target up to US$300 million in participation from Kenyan investors and, subject to the necessary approvals and final terms, would be the first unsponsored inward GDR programme of its kind in Africa,” said Renaissance Capital chairman David Kinyua.
The Dangote refinery is selling 4.1 billion shares on the Nigerian Exchange (NGX) at NGN525 each, an offer worth about NGN2.15 trillion.
The offer opened on September 14 and closes on October 13.
Under the proposed structure, the Dangote shares would remain in custody in Nigeria, with Kenyan investors buying and selling receipts representing them on the NSE.
The NGX will remain the main market for the shares.
“An investor in Kenya looking to access a Nigerian-listed share has traditionally had to deal with another market, another currency and another set of market arrangements,” said Renaissance Capital managing director Stanley Kariuki.
“The proposed GDR changes that. It would put the instrument on the NSE, allow it to trade and settle in Kenyan shillings, and give investors access through local market infrastructure.”
In an unsponsored GDR, regulated financial institutions rather than the company itself set up the programme.
Renaissance Capital will act as the GDR issuer, lead transaction adviser and sponsoring broker, while Stanbic Bank Kenya will hold the underlying Nigerian shares in custody.
Licensed Kenyan stockbrokers will collect investor orders and handle know-your-customer checks, with Renaissance Capital setting final allocations under a published methodology.
NSE chief executive Frank Mwiti said the deal would open a channel for local savings to flow into pan-African assets without leaving the Kenyan market.
“Kenyan investors are already looking beyond our borders for investment opportunities. What we need to do is make more of those opportunities available through our own market, in a way that is properly regulated and gives investors the information and the protection they need,” said Mr Mwiti.
G&A Advocates, the legal adviser on the deal, said Kenya’s capital markets laws were ready to support the structure.
“Africans now have the opportunity to own a stake not only in one of the continent’s largest companies, but in one of the sectors most critical to its future,” said G&A Advocates managing director Eric Gumbo.
Other members of the advisory consortium include Image Registrars, KSTB, Phanice Global and Newmark Group.
The programme remains subject to regulatory approvals, documentation, investor demand and final terms.
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