You know we all like to get emotional and jump on the bandwagon without really looking closely at the opportunity
Dangote Refinery will be hitting the market on the 14th of September with a valuation in excess of N70 trillion
They are offering about N12 trillion, which represents about 3% of the company at about 4b shares
As expected, there is market frenzy, especially with the oversubscription it witnessed during the previous Private Placement
But tarry, let’s look at this thing very slowly before we break our piggy banks
The valuation in excess of N70 trillion is suspect.
They told us they built it at $20b, and a few years later the IPO is placing it at $49b. What this means, very quickly, is that Aliko has already taken the upside, which is a good reward for all the wahala he went through in setting this up
But for the potential investor, with this valuation, Refinery must hit 100b circa for investors to make a 100% return like Founder has made within the same period, and this may be a ‘stretch’ considering its extraneous factors
Another thing we are all failing to see in our rush is the fact that the Refinery lost money last year.
It recorded a full-year after-tax loss of $476m, or N2. 23 trillion in 2024
It also encountered a $410m third-party commodity hedging loss in early 2026, which was offset by intra-group derivatives
All these were reversed when it now declared a PBT of N1. 6b driven, as reported, as a direct fallout of the Iran-American war
The war will end, and markets will stabilise, and this would impact the profitability of the refinery, except we keep praying for more wars
So what I am seeing in my corner is the auspicious timing for this IPO
The war and its fallout gave them a window to launch this IPO as a result of what looks like temporary profitability and an opportunity most people in their shoes will take
So, in taking this almighty investment decision, one should discount the figures for the inevitable stabilisation of the markets and its impact on the Refineries’ profitability.
That said, let’s look at other parameters
So the offer price is N525 with a minimum of 10 shares, meaning that ordinary Nigerians, including you reading, can enter at N5, 250
What this means is that he is attempting to dilute block holders so that there is no threat of an Otedola-type uprising
This can never happen, however, as the man is holding over 80% of the firm using four different investment vehicles while selling just 3% to the public
So if you guys like gather like soldier ant, you can never smell control of the company
What Alhaji is doing here is cashing out a little bit. Pulling out some of his sunk capital, which he is perfectly allowed to do
But wait, some analysts have argued that the thing is overpriced by over 100% of its real market value; using enterprise value to EBITDA, it should be N324 at full market price
See, the man spent 10years to build the refinery, lumped in a lot of construction overruns and still built a fertiliser factory inside the matter to reach this $20b
He now dumps the cost of the two into the Refinery and, pulled out the fertiliser, and kept it 100% for himself sans cost.
So this thing will open eyes next year March when the 1st audited account comes out, and you will see he cannot pay beyond 2% yield, unlike MTN that has paid 5%
This will be an impossibility cos he would not be able to pay at least N26 dividend cos his profit cannot carry it, assuming there is no other rally making it not as profitable as we are seeing it
Unlike GT, who at N130 will definitely pay a minimum of N13 to N14
Another mistake he has made is the selling of the Private Placement at N490
This his was mostly bought by non-traditional investors like friends, family and politicians who will now be looking to dump, putting pressure on pricing at the open market once listed
Now that one also does not concern us for now, so let us look at what should concern us in this matter TODAY
The PE ratio of 13.5 is lightly suspect cos they taught us in Stockbroking 101 that PE should be at least 10
PE for the illiterates reading me is the number of years it takes to recoup an investment
It’s EPS, which is earnings per share at N38. 74 would give you an earnings yield of 7.38%, far lower than what you would get on an investment in a condom factory, but still very powerful on an entry price of N525 – remember ive also just said that at this price it would be impossible to pay even 3% and dt 2% is a better projection
So, in all of this, my story, what are my recommendations
For the retail investor, it’s a good buy, especially if you are looking at the mid-to-long-term horizon
Don’t go and put your house rent money or your wife’s dowry or school fees, cos you will cry.
Your investment horizon should be mid- to long-term
What this means is that if you are above 60, waka pass, as you may not recoup with the PE that we are seeing, except you are buying to put in your will for your descendants
But for the young and aggressive investor with a marathoner outlook, this would be a strong Buy
For the institutional investor and HNI, this is ‘a strong opportunity to build generational wealth’ with its unique strong liquidity potential, amongst others
But for both classes of investors, treat this with a ‘3 to 5 year investment horizon and not a quick flip position, and you will be ok and, at best, a cautionary entry for large-ticket investors.
No need to beat me on this one, abeg
Watch out for my virtual session on this matter with AVA Capital na free
Thanks
Duke of Shomolu
Last modified: September 10, 2026
