Nigeria's Dangote Group has been in talks with various African stock exchanges to broaden access to its $1.6 billion refinery initial public offering (IPO) beyond its home market. The talks, which began in April at Dangote's invitation, have focused on how exchanges across Africa could participate in the IPO despite different listing rules. According to Edoh Kossi Amenounve, CEO of Abidjan-based BRVM, the discussions aimed to find a way to allow African investors to participate in the IPO.
The talks have not been without challenges, with regulatory differences complicating the effort. Amenounve noted that it was not easy to reach a consensus on how the IPO could be conducted in different markets. One option being considered is the use of Global Depositary Receipts (GDRs), which would allow instruments representing the shares to be listed on other African exchanges. This approach has been successfully used in Kenya and Botswana.
The Dangote refinery IPO, which closed on October 28, drew significant interest from Nigerian retail and institutional investors. According to people with knowledge of the situation, the IPO attracted around 6.4 trillion naira ($4.77 billion) in demand, approximately three times the amount on offer. The shares are expected to list on the Nigerian Exchange later in November.
Amenounve highlighted the need for regulatory harmonization to facilitate cross-border trading. He urged regulators to move toward mutual recognition of each other's decisions, which would ease the process of listing across multiple African jurisdictions. Currently, companies seeking to list in multiple markets need separate approval from the securities regulator of each market.
The African Exchanges Linkage Project (AELP) has the technology needed for cross-border trading, but regulatory barriers remain. Amenounve emphasized the importance of harmonization and mutual recognition to facilitate cross-border trading. The BRVM is working to develop its derivatives market, with plans to launch West Africa's first derivatives market in 2027.
The BRVM has pushed back the launch of its derivatives market to 2027, citing outstanding regulatory and technology work. Initial products would include forwards on market indexes and selected stocks. The exchange expects one or two IPOs in 2027 and is focused on diversifying beyond its concentration in banks and telecoms.
Amenounve emphasized the importance of diversifying the exchange's listings to include sectors such as mining, agriculture, industrialization, and energy. He noted that the future of the continent depends on these sectors, and the exchange is working to create opportunities for companies in these areas to list and raise capital.
Key points
- Dangote Group in talks with African stock exchanges to broaden access to its $1.6 billion refinery IPO
- Regulatory differences complicating efforts to allow African investors to participate in the IPO
- BRVM pushing back launch of West Africa's first derivatives market to 2027
