Dangote Refinery's is open across Africa but what does…
0 reactions
Dangote Refinery's is open across Africa but what does pan-African investing look like?
The Dangote Refinery IPO is turning into a test of cross-border investing on the continent. The company says investors from 51 of Africa's 54 countries have applied. That's remarkable when most Africans have never been able to buy shares outside their own country
But how you get in depends a lot on where you live:
**•Nigeria:** buy directly, from as little as 10 shares, with small applicants promised priority in allotment.
**•Kenya:** buy Global Depositary Receipts, each backed by one share, with trading on the Nairobi exchange targeted for December.
**•Uganda:** open only to high-net-worth and professional investors, with no public marketing allowed.
So the same company is a retail investment in one country and restricted to wealthy investors in another.
Then there's the price. At ₦525 a share, the valuation seems to assume this year's record refining margins will last. I ran a comparison against several groups of listed refiners using more normal margins, and every one suggested it's expensive. GTI Research reached a similar conclusion, valuing it below the offer price. For non-Nigerians there's also currency risk on top: you're betting on the naira as well as the refinery.
None of that makes it a bad company. It may be one of the most important industrial assets in Africa. But "great company" and "great price" aren't the same thing.
**Questions for the sub:**
•Should more big African companies list across borders like this?
•Is Uganda right to restrict retail access, or is that paternalistic?
•If you're outside Nigeria, did you apply, and did the currency risk factor in?
#local
The Dangote Refinery IPO is turning into a test of cross-border investing on the continent. The company says investors from 51 of Africa's 54 countries have applied. That's remarkable when most Africans have never been able to buy shares outside their own country
But how you get in depends a lot on where you live:
**•Nigeria:** buy directly, from as little as 10 shares, with small applicants promised priority in allotment.
**•Kenya:** buy Global Depositary Receipts, each backed by one share, with trading on the Nairobi exchange targeted for December.
**•Uganda:** open only to high-net-worth and professional investors, with no public marketing allowed.
So the same company is a retail investment in one country and restricted to wealthy investors in another.
Then there's the price. At ₦525 a share, the valuation seems to assume this year's record refining margins will last. I ran a comparison against several groups of listed refiners using more normal margins, and every one suggested it's expensive. GTI Research reached a similar conclusion, valuing it below the offer price. For non-Nigerians there's also currency risk on top: you're betting on the naira as well as the refinery.
None of that makes it a bad company. It may be one of the most important industrial assets in Africa. But "great company" and "great price" aren't the same thing.
**Questions for the sub:**
•Should more big African companies list across borders like this?
•Is Uganda right to restrict retail access, or is that paternalistic?
•If you're outside Nigeria, did you apply, and did the currency risk factor in?
#local
| 1,000 mlx | |
| 3 | |
| 0 |