Dangote Refinery valued at N82.6trn ahead of IPO on NGX
Two firms, CardinalStone Research and Chapel Hill Denham, have independently valued Dangote Petroleum Refinery and Petrochemicals FZE at between N77.7 trillion and N82.62 trillion, above the N65.22 trillion indicative market capitalisation at which the refinery is expected to list on the Nigerian Exchange (NGX).
The comparison follows the release of Dangote Refinery’s IPO prospectus, which shows that the company will offer 4.1 billion new shares at N525 each, alongside 120.13 billion existing issued shares, giving it an indicative post-offer market capitalisation of N65.22 trillion if the base offer is fully allotted.
CardinalStone placed a 12-month equity valuation of N77.7 trillion, equivalent to about $58.8 billion, on the refinery, while Chapel Hill Denham arrived at a current fair equity value of $62.53 billion, equivalent to N82.62 trillion at an exchange rate of N1,321.22/$.
Dangote Refinery’s IPO prospectus provides the clearest benchmark against which the CardinalStone and Chapel Hill Denham valuations can be assessed.
According to the prospectus, Dangote Petroleum Refinery currently has 120.13 billion issued and fully paid ordinary shares, with another 4.1 billion new shares being offered to investors at N525 per share.
At the N525 offer price, the prospectus places the refinery’s pre-listing market capitalisation at N63.07 trillion and its indicative market capitalisation at listing at N65.22 trillion, assuming the base offer is fully allotted.
Against that N65.22 trillion indicative listing valuation, the two investment firms believe the refinery could be worth more.
CardinalStone placed a 12-month equity valuation of N77.7 trillion on Dangote Refinery, translating to a target price of N688.09 based on the share count available when its valuation was prepared.
Chapel Hill Denham estimates a current fair equity value of $62.53 billion, equivalent to N82.62 trillion, and projects the company’s equity value could rise further as its planned capacity expansion comes on stream.
In other words, while the refinery is expected to enter the market at an indicative valuation of about N65.22 trillion, the two independent research houses place its fair value in a range of N77.7 trillion to N82.62 trillion.
The research houses arrive at those numbers by estimating the profits and cash flows Dangote Refinery could generate over time and then discounting those future earnings back to today’s value.
