Rwandan traders have a brand new route into one in every of Africa’s greatest industrial tasks after entry was opened to the preliminary public providing (IPO) of Dangote Petroleum Refinery and Petrochemicals in Nigeria.
Though the shares should not at the moment listed on the Rwanda Inventory Trade (RSE), eligible traders in Rwanda can take part within the Nigerian primary-market supply by way of United Capital Monetary Providers PLC, Rwanda.
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Shares are priced at about Rwf589 ($0.40) every, with a minimal subscription of 10 shares. The supply, promoted as an “IPO for the individuals”, is geared toward widening participation in wealth creation throughout Africa.
The RSE mentioned discussions are additionally beneath method on a attainable cross-listing or twin itemizing of the refinery’s shares.
“The Dangote Petroleum Refinery IPO is being provided by way of the first market in Nigeria, although talks on cross/twin itemizing are ongoing. Nevertheless, eligible traders in Rwanda should still be capable to take part within the accepted IPO by way of United Capital Monetary Providers PLC, Rwanda,” a press release from the trade exhibits.
A future twin itemizing would enable the shares to commerce in each Nigeria and Rwanda, doubtlessly making it simpler for native traders to purchase and promote them on the home market.
Economist John Bosco Kalisa mentioned the refinery might attraction to traders searching for publicity to a big industrial enterprise serving a continent with sturdy demand for petroleum merchandise.
“The benefits are quite a few. The returns on funding shall be substantial and dangers shall be minimal because the area is the fastest-growing area throughout the continent, with sturdy political and financial stability,” he mentioned.
Kalisa argued that demand danger is comparatively restricted as a result of petroleum merchandise stay important throughout African economies.
He however cautioned that traders shouldn’t ignore longer-term dangers, together with competing industrial and political pursuits that would have an effect on main regional infrastructure tasks.
“One caveat to pay attention to is that numerous pursuits could undermine the long-term sustainability of the refinery,” he mentioned.
The Dangote refinery has capability to course of greater than 650,000 barrels of crude oil per day, making it one of many largest refining services on the continent.
Kalisa mentioned stronger refining capability in Africa might assist international locations retain extra worth from their pure sources and cut back dependence on imported refined petroleum merchandise.
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For Rwanda, which imports petroleum merchandise, he mentioned a stronger African refining trade might have wider financial advantages by easing strain on overseas trade and bettering entry to gasoline provides.
“It would enhance the welfare of Rwandans as petroleum merchandise are key components in numerous sectors of the financial system, together with manufacturing, transport and logistics, agriculture in addition to the aviation trade,” he mentioned.
He famous that a number of East African international locations have oil sources however have traditionally exported crude oil whereas importing refined merchandise, which means a lot of the worth addition takes place elsewhere.
“Meaning the worth of the product was created someplace and the advantages are residing in these international locations which have a refinery,” Kalisa mentioned.
Ejikeme Okoli, Director of Africa Operations at United Capital Plc, which is facilitating entry to the IPO for Rwandan traders, mentioned the supply additionally displays a broader effort to attach Rwandan traders to alternatives throughout African markets.
“The great factor is that it’s starting to attach Rwandans to alternatives throughout the continent. Traders will be capable to partake in mechanisms and devices that promise respectable returns,” he mentioned.
Okoli mentioned United Capital is working with native stockbrokers to widen participation in capital markets and join people, firms and establishments to funding alternatives inside and outdoors Rwanda.
He mentioned curiosity within the Dangote supply has been rising amongst Rwandans at house and overseas.
“We’ve seen rising curiosity from each Rwandans in Rwanda and Rwandan residents in different international locations,” he mentioned.
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Some potential traders have already accomplished subscription kinds, whereas others have been searching for steering on the way to take part, he added.
“We've seen very, superb curiosity from not simply Rwandan people, but additionally corporates. Some establishments have additionally reached out, expressing curiosity in the way to take part on this IPO,” Okoli mentioned.
In accordance with studies, traders subscribed for 1.476 trillion naira, about $1.10 billion, inside hours of the supply opening, representing roughly 69 per cent of the refinery’s fundraising goal.
Subscriptions stay open till October 13.People can take part from 5,250 naira (Rwf5,800) for 10 shares.
Okoli mentioned participation is open to people, companies and establishments that meet the relevant necessities.
“It’s throughout people, companies and other people throughout numerous sectors—anybody trying to make investments. It’s additionally a chance to begin laying the muse for wealth creation,” he mentioned.
For Rwandans, participation is at the moment being facilitated by way of United Capital Monetary Providers PLC in Rwanda somewhat than by way of an RSE itemizing.
The Nigerian refinery might additionally function a reference level for traders watching the deliberate refinery undertaking in Kenya.
Okoli mentioned traders sooner or later Kenyan undertaking might use the Nigerian operation to evaluate the group’s refinery mannequin and efficiency earlier than making later funding choices.
“For some, it’s a chance to spend money on the refinery—the one in Nigeria—and perhaps give it a while to see if it meets your expectations. That may then turn out to be the premise for making choices when the one in Kenya is constructed and listed,” he mentioned.
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“However this IPO proper now’s for the refinery in Nigeria.”
Rwanda has expressed curiosity, by way of the Presidency, in taking a couple of 10 per cent stake within the deliberate Kenyan refinery.
Okoli mentioned increasing refining capability in Africa might ultimately assist enhance gasoline provide and cut back shortages, whereas decrease dependence on imported refined merchandise might additionally ease strain on overseas trade.
