What Will Dangote Refinery Use the IPO Proceeds For?

Before putting money into the Dangote Refinery IPO, I would not look at the Dangote name alone. I would go through the prospectus and examine the numbers, valuation, use of proceeds and risks.

For example, the current offer is 4.1 billion shares at ₦525 per share, which could raise about ₦2.15 trillion. The stated purpose of the IPO is to support the refinery’s planned expansion, including increasing capacity from about 700,000 barrels per day to 1.4 million barrels per day.

Here is how I would analyse it:

1. EPS — Earnings Per Share

EPS tells me how much profit belongs to each share.

For example, if the company makes ₦5 trillion profit and has about 124 billion shares, EPS would be roughly ₦40 per share.

At an IPO price of ₦525, that would give a P/E of roughly:

₦525 ÷ ₦40 = 13.1x

Some current analysis puts the annualised H1 2026 P/E around 13x, but H1 earnings should not automatically be assumed to continue at the same level throughout future years.

2. P/E ratio

I would then compare that P/E with similar refining companies.

If Dangote is trading at 13x earnings while comparable companies are around 8x, I would ask: What am I paying the extra premium for?

It could be justified by expected growth, larger capacity or stronger future earnings—but the future has to deliver those expectations.

3. Debt

I would check total debt, interest expenses and net debt.

A company can report a huge profit but still have significant debt obligations. I want to know whether future cash flow will be used to expand the business, pay debt, or distribute dividends.

4. Cash flow

This is extremely important.

Profit on the income statement is not the same thing as cash actually coming into the business.

For example, if Dangote reports ₦5 trillion profit but only generates ₦2 trillion from operations after working-capital requirements, I would want to understand why.

For a refinery, I would particularly examine crude procurement costs, inventory, receivables and capital expenditure.

5. Profitability

I would look at revenue, gross profit, EBITDA and profit after tax over several periods.

Dangote Refinery reported about $13.9 billion revenue and $1.82 billion net profit in H1 2026, compared with a loss in the previous year. That is a major turnaround, but I would still ask whether those margins are sustainable.

6. Dividend prospects

I would not buy simply because I expect dividends.

The company’s official IPO information makes it clear that dividends are not guaranteed; they depend on performance, cash requirements and the Board’s decision.

For example, if I invest ₦525,000 for 1,000 shares and the company later declares a ₦20 dividend per share, I would receive ₦20,000 before any applicable taxes. But if no dividend is declared, I receive nothing from dividends.

7. Valuation

This is probably one of the most important questions:

«”Is ₦525 actually cheap, fair or expensive relative to the company’s future earnings?”»

The IPO values the refinery at roughly ₦65 trillion/$48 billion, according to current reports. Some analysis has noted that this valuation is higher on certain measures than comparable international refiners.

So I wouldn’t look only at the fact that Dangote Refinery is a huge and important company. A great company can still be an expensive investment if the price is too high relative to its future earnings.

8. Use of IPO proceeds

This tells me what my money is helping the company accomplish.

In this case, the proceeds are intended to support the refinery’s expansion. The plan is to increase refining capacity to about 1.4 million barrels per day.

So I would ask:

– How much will the expansion cost?
– How much of the IPO money will go directly into expansion?
– What additional profit and cash flow is the expansion expected to generate?
– When is the expansion expected to be completed?
– What happens if the project costs more than expected?

9. Risk disclosure

Finally, I would read the risk section carefully.

For a refinery, important risks can include crude-oil supply and prices, global refining margins, exchange-rate movements, government regulation, operational problems, expansion delays and changes in the energy market. Current reporting also highlights FX, regulatory and execution risks.

So, realistically, my analysis would look like this:

₦525 IPO price → calculate EPS → calculate P/E → compare with peers → examine debt → examine operating cash flow → understand dividend policy → understand exactly where the ₦2.15 trillion can go → read the risks → then decide whether the valuation makes sense for my own risk level and investment horizon.

The key point is that the size, popularity or reputation of Dangote Refinery should not replace valuation analysis. The real question is whether the company’s future profits and cash flows can justify the price being offered.