Dangote Refinery’s planned IPO could become Nigeria’s largest ever. Here’s what Nigerians need to know about the offer, pricing, SEC approval and how to invest.

Over the next two weeks, “IPO” is likely to dominate business conversation across Nigeria, as Dangote Petroleum Refinery and Petrochemicals FZE moves toward listing on the Nigerian Exchange (NGX).

Dangote Group confirmed it had secured Securities and Exchange Commission (SEC) approval for the offer, setting up what is projected to be the largest IPO in the history of the Nigerian stock market, one big enough to potentially push the bourse’s market capitalisation, currently around N159.55 trillion, past N200 trillion.

Here’s a breakdown of what an IPO actually is, how it works, and what Nigerians need to know if they want to take part.

What Is an IPO, and How Does It Work?

Before an IPO, a company is privately held, owned by its founders, venture capitalists, or private equity investors. Going public means offering shares to the public for the first time, opening the door for the stock to eventually trade on an exchange.

A company can do this in one of two main ways, or both at once:

• Offer for subscription: The company issues brand-new shares, and the money raised goes into the business itself.
• Offer for sale: Existing shareholders sell shares they already hold, with proceeds going to those shareholders rather than the company.

These transactions happen in the primary market, where new securities are sold directly to investors. Once the offer closes and shares are allotted, the stock moves to the secondary market, where investors trade it among themselves through the stock exchange. From that point, the share price will rise, fall, or hold steady depending on investor sentiment, company performance, and broader market conditions, the IPO itself is a one-time event, though a listed company can return later for more capital via a rights issue or private placement.

Four Common IPO Structures

Companies generally choose from four listing methods:

1. Traditional fixed-price IPO — the company and its underwriters set the share price in advance using valuation analysis, rather than letting market demand decide it.
2. Book-building IPO — a price range is published, and the final price is set based on investor demand within that range.
3. Direct public offering — existing shareholders sell shares directly without an underwriter, with price set purely by demand and supply; the company isn’t raising fresh capital through this route.
4. Special purpose acquisition company (SPAC) — a shell company raises capital specifically to acquire or merge with a private business, giving that business faster access to public markets. The shell company is required to complete the acquisition within two years.

What SEC Registration Involves

Any company planning an IPO must register its securities with the SEC, which reviews its financial, corporate and offer documents for compliance with capital market rules. Central to this is the prospectus, a document laying out material information about the company, the securities on offer, the terms, and the risks involved, meant to help investors make informed decisions.

SEC requirements for IPO registration typically include audited accounts covering the preceding five years (or the company’s full operating history if shorter than five years), with the most recent accounts no older than nine months, plus shareholder and board resolutions authorising the offer. The process also involves an issuing house, which manages the offer and its documentation.

NGX Listing Requirements

Beyond SEC approval, companies must also meet NGX listing rules, which vary depending on which of the exchange’s three boards a company is targeting:

Growth board (for smaller, growing companies), split into two segments:

• Entry segment: minimum market cap of N50 million, at least 10% free float, minimum 21 public shareholders.
• Standard segment: minimum market cap of N500 million, at least 15% free float, minimum 51 public shareholders.

Main board (for more established companies), which offers different qualifying routes based on profitability or market cap, including a cumulative pre-tax profit threshold over one to three years, or a minimum market capitalisation of N4 billion. Main board companies need at least three years of operating history and financials, at least 20% public float, a minimum of 300 public shareholders, registration as a public limited company, and a shareholders’ equity of at least N3 billion. Promoters and directors must also retain 50% of their pre-IPO shares for 12 months after listing.

Premium board (for the largest companies), which carries similar core requirements to the main board but adds a minimum market capitalisation of N200 billion at the time of application, a corporate governance score of at least 70%, at least 20% free float or a free-float value of N40 billion, and the same 300-shareholder minimum and promoter lock-up rules.

Where Dangote Refinery Fits In

In May 2024, Dangote Group executive director Devakumar Edwin said the refinery intended to pursue a dual listing on both the UK and Nigerian stock exchanges, citing concerns that the NGX alone lacked the depth to absorb a listing of this size. Under NGX rules, a dual-listed company needs a market cap of at least N28 billion at listing, at least two years of operating history and audited financials, and must make at least 10% of each equity class available to the public, with a minimum of 51 public shareholders. Notably, dual-listed companies aren’t bound by NGX’s usual lock-up period for existing shareholders, and don’t need to keep meeting NGX’s ongoing disclosure obligations if they’re listed on another exchange with World Federation of Exchanges (WFE) status, though they must maintain a resident nominated representative for as long as they remain listed.

With its share price already fixed at N525, the refinery has opted for the traditional fixed-price IPO model rather than letting demand determine pricing. It’s offering roughly 10% of the business, aiming to raise N2.15 trillion toward its broader $40 billion expansion plan, which would take production capacity from 650,000 to 1.4 million barrels per day, making this an offer for subscription rather than a sale of existing shares. Given the company’s target valuation of around $50 billion (over N60 trillion at current exchange rates), it’s expected to list on either the main or premium board once the offer concludes.

How Nigerians Can Invest

Before putting money into any IPO, read the company’s prospectus first, it lays out the offer terms, application process, eligibility criteria, and risks.

Once an offer is live, investors typically subscribe through:

• Registered stockbrokers
• Receiving agents named in the offer document
• Other approved channels specified in the prospectus

The process generally involves submitting investor details, selecting the number of shares to buy, and making payment within the offer window. For the Dangote refinery IPO specifically, this means going through approved capital market operators once the subscription window formally opens and the offer clears final regulatory approval, following whatever terms are set out in the SEC-approved prospectus.

Shares are allotted after the offer closes, and once the securities are admitted for trading on the exchange, investors can begin buying and selling them on the secondary market.

A word of caution: always verify that both the offer and the operator handling your investment carry proper regulatory approval before committing funds. The SEC maintains a public directory of registered capital market operators, and advises investors to rely on its official announcements regarding securities offerings. Investors can check the SEC’s portal at www.sec.gov.ng or reach its enforcement department at enforcement@sec.gov.ng with questions.

This is general information, not financial advice. Prospective investors should consult the final prospectus and, where needed, a licensed financial adviser before deciding whether to invest.