South Africa’s largest asset manager and Nigerian pension fund administrators have applied for shares worth nearly $1 billion in Dangote Petroleum Refinery, as institutional investors seek a stake in Africa’s largest oil refinery.

The applications form part of the refinery’s initial public offering (IPO), which has attracted demand exceeding the number of shares originally offered to investors.

Bloomberg reported on Friday, citing people familiar with the transaction, that South Africa’s Public Investment Corporation (PIC) applied for approximately $500 million worth of shares, while Nigerian pension fund administrators sought between $400 million and $500 million.

The PIC manages nearly $220 billion in assets, including retirement savings belonging to South African government employees.

The Nigerian applications came from pension fund administrators operating under the Contributory Pension Scheme, serving about 11 million contributors across 20 pension funds.

According to Bloomberg, part of the proposed Nigerian investment has already been covered through an earlier private placement.

The refinery’s founder, Aliko Dangote, could consider selling part of his personal shareholding through a separate transaction to accommodate the demand from institutional investors, according to people familiar with the discussions.

However, no decision on such a sale has been announced yet.

Pension regulator grants special approval

The reported applications follow a decision by the National Pension Commission (PenCom) in May to grant Nigerian pension fund administrators a special exemption allowing them to invest in the refinery’s public offering.

The decision temporarily relaxed certain investment requirements, including rules relating to a company’s profitability and dividend payment history.

PenCom justified the exemption on the refinery’s strategic importance to Nigeria’s economy and energy security, as well as the track record of its parent company, Dangote Group.

The regulator, however, maintained that pension fund administrators must comply with their internal investment policies, risk management procedures and responsibilities to contributors and retirees.

The exemption applies specifically to the Dangote refinery offering and does not automatically extend to other investments as of now.

Meaning that though pension fund administrators have been permitted to participate, they remain responsible for assessing the risks and protecting retirement savings under their management.

IPO attracts more than $4 billion in applications

The pension funds’ interest comes as Dangote refinery concludes one of Africa’s largest public share sales.

The refinery launched its IPO on September 14 and closed on October 27, offering 4.1 billion shares at N525 each, with an initial fundraising target of approximately N2.15 trillion.

However, the offering attracted applications worth about N5.85 trillion, significantly exceeding the original target.

The refinery reportedly received close to four million individual subscription applications, although the number remained below Mr Dangote’s ambition of attracting 10 million retail investors.

The offering values the refinery at approximately $50 billion.

The strong demand may mean that not all investors are guaranteed to receive the number of shares they requested. The final allocation will depend on the number of shares available and regulatory approval.

Nigeria’s Securities and Exchange Commission (SEC) is expected to approve the final share allotment on November 17.

According to the offering prospectus, trading is scheduled to begin 15 business days after the allotment, potentially around December 8, though the company is targeting an earlier commencement, subject to regulatory approval.

Refinery targets major expansion

The planned share sale is part of Dangote refinery’s efforts to raise funds for a major expansion of its operations.

The refinery, located in Lekki Free Zone, Lagos State, has an installed processing capacity of 650,000 barrels of crude oil per day.

The company plans to increase this capacity to 1.4 million barrels per day, a development that would significantly expand its ability to supply refined petroleum products to Nigeria and other markets.

The refinery has already become an important part of Nigeria’s efforts to reduce dependence on imported petroleum products.

Its expansion would require substantial investment, making the public offering an important source of capital for the company.