Dangote Refinery

[laughs]

Uh, the IPO for Dangote Refinery, I don't know if you have gone through the prospectus.

For me, it's exciting.

I will not participate in it.

There's something which has popped up recently.

This is now outside NSE because, uh, I want to cover something else.

Uh, the IPO for Dangote Refinery.

I don't know if you have gone through the prospectus.

[upbeat music] Let's catch up with Meryl Pick at the Old Mutual Investment Group.

Let's look at markets, and there's such a good lesson in the Dangote Refinery IPO, Meryl, and the powerful knock-on effect of investment and investment sentiment generally, and how it is shifting sentiment in Nigeria, and of course, the knock-on i- i- impact on companies like MTN, for example, also riding on the wave that this IPO has brought.

Absolutely.

It's such an interesting case.

I'm asking as limely as possible.

yes yes so there are different approaches to introducing a stock to the stock market so they call it introduction right so when you say introduction it just means that um the stock comes like automatically on like in the stock market right so you can see it added to like the entire list of yes stock markets you can start trading immediately you can buy can sell immediately while ipo like this initial public offers like this you buy them they don't reflect in your portfolio portfolio immediately so you have to wait for a while for you know sec to do the necessary thing they're supposed to do because they are offering a particular amount to the public and they cannot exceed that amount for example The Dangote Refinery has about, I believe, $4 billion, if I remember well, that they are offering to the public.

So it means that if people subscribing subscribe more than $4 billion, they would need to take time to subscribe.

take just $4 billion and return the remaining money to people.

day so i think you don't see when all of this has like been decided and everything no no not died down now per se i mean like they've distributed the shares to everyone the allocation right okay yes that's when it would now like start showing on a stock exchange list so you see like this process is different according to them the decision making and everything latest hopefully by december that is when it will reflect on our portfolio now i've been saying these scenes that the truth is a lot of people will still drag dangote now he's the big shot in all of this but i'm giving this a few weeks right very ignorant people would end up dragging him and why is that um this is because um the average nigerian is not so financially literate not literate for them to understand how an ipo works right so the good part is there are people that don't even know that there are platforms they can use to check this thing so if they buy it right and they get allocated those kind of people they may buy it and forget it for the next 20 years and the sad part of it is just like small money those people used to buy like five thousand there yeah less than 50k less than 100k that's what they'll buy right but then let's say right that this category of people actually buy this particular ipo thing now let me tell you two things that might happen for this category of people that they don't even know there's an app that exists that they can monitor this right one they may get allocated and just forget about it what they'll be expecting is dividends because they don't know there's something called capital appreciation so they expect dividends at time with their 5 to 50 they are seeing dividends or 15 era

yeah do not be asking

so this is the money that dangote promised us 50 naira something something on top of my 5 to 50 i was thinking that they'll be paying me something that's by the way right and so far they are just seeing something from dangote refinery they'll feel like okay i'm an investor now the second category of people in that um

they

But looking at the daily or the monthly pressure that some of these importers put on the dollar or the available dollars in the system, I think it's better if we have the companies in the system refining.

But I think that this also sends a signal to international investors that while Ghana is moving away from locking in almost all their crude to be exported raw to refineries abroad, Sensio has come in and has proven that it is possible that you can get parcels from the local space and cut your costs, right? The same thing that Nigeria is helping Dangote Refinery do.

I think, of course, we are also helping.

Sensio can also take century is also benefiting from the same thing in the local space so that gives other investors that kind of you know momentum and believe that well if you come into ghana to invest to set up and you operate well you follow all the rules there's going to be a point in time where government will cut a portion of their past that possible in terms of what they generate in the country to be able to give because just like he let me mention central's biggest problem was transport costs how they were sourcing fuel from different parts of africa to get one million dollars from ghana's own fields i think is very important and talking about the environment i believe that already there is that enabling environment in terms of policies and tax structures to actually maintain some of these private you know refineries in the space but i'll be much more happy If we get, you know, talk and receive it.