Kenyan investors may access Dangote Refinery IPO through GDRs

Kenyan investors could gain access to Dangote Petroleum Refinery’s initial public offering (IPO) through a proposed Global Depositary Receipt (GDR) structure that would link the Nigerian shares to securities traded on the Nairobi Securities Exchange (NSE).

The proposal by Renaissance Capital would give investors in Kenya and potentially other East African markets a local route to participate in Dangote Refinery’s Nigerian share offering, subject to approvals from Kenya’s Capital Markets Authority (CMA) and the NSE.

Read also: Dangote Refinery Construction begins in Kenya, Nigeria Set For New DeepSea Port & Fuel enters 2027 campaign conversations

The proposed arrangement would not amount to a listing of Dangote Refinery itself on the NSE. Instead, the refinery’s ordinary shares would remain held in Nigeria, while corresponding GDRs would be issued through a Kenyan depositary structure and made available to eligible local investors.

If approved, the GDRs would trade on the NSE and settle through the Central Depository and Settlement Corporation (CDSC) in Kenyan shillings, allowing investors to gain exposure to the Nigerian IPO through Kenya’s domestic capital-market infrastructure.

Stanley Kariuki, CEO of Renaissance Capital Kenya, said the initiative was driven by the question of how investors in Kenya and the wider East African region could participate in the offer.

“Our question at Renaissance Capital was simple: how do we enable Kenya and East African investors to participate in this landmark opportunity?” Kariuki said.

The proposed structure would involve Dangote Refinery’s Nigerian shares being deposited with a custodian in Lagos. Once the deposit is confirmed, corresponding GDRs could be issued through the Kenyan depositary structure.

The GDRs would then provide investors with an instrument linked to the Nigerian shares while allowing transactions to take place through Kenya’s capital-market infrastructure.

Kariuki said developing the structure required coordination among several financial-market institutions.

“It brought together a strong consortium led by Renaissance Capital Kenya and Renaissance Capital Nigeria, working alongside Stanbic as the custodian, Image Registrar, GNA Advocates and Newmark,” he said.

Renaissance Capital Africa would act as issuer, lead transaction adviser and sponsoring broker under the proposed structure, while the NSE would serve as project coordinator.

Stanbic Bank would act as receiving bank and custodian/depositary, holding the underlying Nigerian shares in segregated custody and facilitating the issuance and cancellation of GDRs.

GBA Advocates LLP would provide legal services, while participating brokers would handle investor eligibility, know-your-customer and anti-money-laundering checks, suitability, allocation and distribution.

One of the key features of the proposed arrangement is that the GDRs would settle in Kenyan shillings, providing local investors with a domestic-market mechanism for accessing an offshore investment.

Kariuki said currency considerations were central to the structure. “This is fundamentally a Kenyan shilling denominated investment solution, providing access to an offshore opportunity,” he said.

The structure is being developed within a tight timeframe because of the limited window for Dangote Refinery’s IPO.

“The IPO window is limited, and we had to develop and execute a solution within a very tight timeline,” Kariuki said.

He added that transparency around pricing, costs and investor treatment was also an important consideration in designing the product. African Economy Inc.

The proposed Kenya structure comes as Dangote Refinery’s IPO increasingly takes on a pan-African dimension.

Zimbabwe has already secured approval for local investors to participate in the offer through a regional depositary receipt programme, while Rwanda has also been exploring arrangements to give its investors access to the IPO.

The developments are creating new links between Nigeria’s capital market and markets elsewhere on the continent, potentially allowing African investors to gain exposure to major companies without having to directly access foreign exchanges.

Kariuki said the significance of the proposed GDR structure extends beyond the Dangote transaction.

“It is more than one transaction. It is about connecting African capital to Africa opportunities. It is about making our capital markets more integrated,” he said. A

He said the proposal demonstrated what could be achieved when capital-market institutions, regulators, custodians, advisers and investment banks work towards a common objective.

Read also: Schneider Electric backs Kenya push to build data centre talent

“The solution we are proposing, a GDR structure, demonstrates what can be achieved when the capital markets institutions, regulators, custodians, advisors, investment banks come together around a common objective,” Kariuki said. African Economy Inc.

Dangote Refinery launched its Nigerian IPO on September 14, offering 4.1 billion shares at N525 each. The offer is scheduled to close on October 13, with the company seeking to raise about N2.15 trillion, or roughly $1.6 billion.

The offering is already attracting interest beyond Nigeria, with the proposed Kenya GDR programme potentially opening another channel for African investors to participate.

For Kenya, the structure would create a direct link between the country’s capital market and one of Africa’s largest industrial assets while giving local investors access to a Nigerian equity offering through a familiar trading and settlement system.

Read also: Nigeria set to strengthen bilateral relations with Italy

The proposed transaction, however, remains subject to regulatory approvals and implementation of the GDR framework before Kenyan investors can participate.

Faith Omoboye is a foreign affairs correspondent with background in History and International relations. Her work focuses on African politics,…