Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: In nineteen seventy seven, dearbiun Banni's firm, Reliance's ambition had
Speaker 2: outgrown the capitol it could get from traditional bank loans,
Speaker 2: and so he turned to ordinary Indian investors and transformed
Speaker 2: equity culture in South Asia. Reliance Textiles as it was known,
Speaker 2: then offered two point eight million shares at ten rupee
Speaker 2: per share and then convinced thousands of ordinary Indians to invest.
Speaker 2: It was a huge success. The share sale was oversubscribed
Speaker 2: seven times and his son Mukesh was on his way
Speaker 2: to become one of Asia's richest men.
Speaker 1: Reliance has grown from a small startup to becoming one
Speaker 1: of the largest and the most admired companies in the world.
Speaker 1: We have established many records in this period that has
Speaker 1: made India and our shareholders prout.
Speaker 2: Now in twenty twenty six, another tycoon is looking to
Speaker 2: make similar waves. A Laji Aliko Dangote is Africa's richest
Speaker 2: person and many see him as an industrialist in the
Speaker 2: mold of Ambani Alico.
Speaker 3: Danote is an industrialist.
Speaker 4: Really, we compared him to John D. Rockefeller.
Speaker 2: His oil refinery in Legos is the continent's largest, processing
Speaker 2: six hundred and fifty thousand barrels of crude per day,
Speaker 2: and as prices surge as a result of the war
Speaker 2: in Iran, Dangote's plant is in huge demand. Now. He
Speaker 2: wants to list part of the refinery on the Nigerian
Speaker 2: stock market and wants to see investment from within Africa.
Speaker 2: So could dan Gote's IPO transform investment culture in Africa
Speaker 2: the way Reliance did nearly fifty years ago. I'm Jennifer's
Speaker 2: Abasajob and this is the next Staffrica podcast, bringing you
Speaker 2: one story each week from the continent, driving the future
Speaker 2: of global growth with the context only Bloomberg can provide.
Speaker 2: Joining me today is our managing editor for Africa, that
Speaker 2: is our Ghosh and our Nigeria based reporter and Duka
Speaker 2: or Jinmo. Thank you both so much for joining us
Speaker 2: on the podcast. Argent, I believe it's your first time
Speaker 2: joining us on the podcast.
Speaker 4: Surprisingly, I'm super excited, super excited.
Speaker 2: Jennifer, Yeah, it's such a pleasure to have you. There's
Speaker 2: so much to unpack, especially when we think about these
Speaker 2: two tycoons. Maybe, though, in Duka, we just start with
Speaker 2: you because you have been doing quite a lot of
Speaker 2: extensive reporting on Dan Gote for a number of years.
Speaker 2: You were just in DC doing some reporting on him,
Speaker 2: speaking with him about his plans to sell shares of
Speaker 2: his refinery in an Ibo. There's still a lot of
Speaker 2: questions about what this could look like when it could happen.
Speaker 2: How much are you able to clean from the conversations
Speaker 2: that you had with him, not.
Speaker 5: So much from him at the moment. Also give you
Speaker 5: a context of what they we're talking about him. We're
Speaker 5: talking about the largest refinery in Africa and in continental
Speaker 5: Europe can process in Aust fifty thousand barers of cool.
Speaker 5: But they construction started in twenty seventeen in the body
Speaker 5: stided production in twenty fourteen.
Speaker 4: And it's so sophisticated.
Speaker 5: Yeah, And when he speak to experts in the refining business,
Speaker 5: the marveler Dan what they was able to achieve with
Speaker 5: a refinery in labels.
Speaker 4: Now to the IP and what we know what he told.
Speaker 5: Me from speaking to him twice in DC, he is
Speaker 5: thinking of listing around ten percent of the refinery primarily
Speaker 5: in Nigeria, with second releastings in other countries, which he
Speaker 5: didn't say, but I spoke to other members of his team,
Speaker 5: and they're looking at South Africa, Ghana, Kenya for those
Speaker 5: second releastenings.
Speaker 4: We know it's going to happen in the second part
Speaker 4: of the year.
Speaker 5: I've had August been mentioned as a month where the
Speaker 5: refinery is not finally gal to the public. He's not
Speaker 5: quite clear what the evaluation is because I pressed him
Speaker 5: on that what the evaluation of the refinery is, and
Speaker 5: he said they're still working on that, so we don't
Speaker 5: have that detail at the moment.
Speaker 2: You know, I am currently in Nairobia, should say. And
Speaker 2: I was speaking to Riko d'enote at the Africa We
Speaker 2: Built summit. The whole discussion was around infrastructure investment, right,
Speaker 2: and he is the symbol of what that looks like
Speaker 2: on the continent. I wanted to play this this bit
Speaker 2: from what we heard from him, which I thought was
Speaker 2: quite interesting about his comments around the continent relying too
Speaker 2: much on overseas investment in the past.
Speaker 6: We have made a lot of mistakes in the past
Speaker 6: where we've been relying on foreign investors. The foreign investor
Speaker 6: will not come without the leadership of domestic investor, so
Speaker 6: domestic investors must take the risk and start blowing your
Speaker 6: own continent, not for you to wait for foreign investors.
Speaker 2: I wonder when you look at how much he went
Speaker 2: through to get this refinery off the ground where it's
Speaker 2: at right now, and now where he's trying to take
Speaker 2: this IPO, how much of his ambition is around tapping
Speaker 2: this African investment, especially when you look at this this
Speaker 2: pan africanism that he's trying to do with this listening.
Speaker 4: I mean, he's gone through a lot to get it
Speaker 4: to where it is now.
Speaker 5: Gen As he said, he had issues in his home
Speaker 5: country in Nigeria, issues recruits apply. I think he's not
Speaker 5: across all that the refinery is performing at and three
Speaker 5: percent according to the little then what he says is
Speaker 5: a pig performance and he's his ambition to expanding to
Speaker 5: the rest of the of the continent.
Speaker 4: I think it's part of his white ambition.
Speaker 5: To take his conglomerate to a hundred billion dollar business
Speaker 5: by in the next four years. He plans to invest
Speaker 5: forty billion dollars across several African countries and he sees
Speaker 5: this IPO, you know, as.
Speaker 4: A way of doing that.
Speaker 5: And he makes the point about how you know, Africans
Speaker 5: need to invest you know, in not just his company,
Speaker 5: but companies on the continent, and he taps into what
Speaker 5: you hear the multilatal organizations here talk about the financial
Speaker 5: institutions like the AFC for instance, and they've talked about
Speaker 5: the four trillion dollars that's available to pension phones you know, banks,
Speaker 5: you know, and and other surveillance institutions on the continent
Speaker 5: and how that can be can be plowed into building
Speaker 5: out infrastructure, you know, ports, you know, airports, things like refineries,
Speaker 5: and Dangotist sees his company has been in a position
Speaker 5: where it can benefit you can tap into those resources.
Speaker 5: We'll see what the appetite is when he eventually goes
Speaker 5: into the market. But if you look at the spread
Speaker 5: of his companies across the continents, I think he is
Speaker 5: in a better position to be able to tap into
Speaker 5: these ponds in places like Kennya, Ethiopia, Ghana, where he
Speaker 5: already has outstanding businesses every coast for instance.
Speaker 4: You know, on the plans that he has.
Speaker 5: Spread across the continent, he wants to build the refinery
Speaker 5: to process copper, and Zambia he wants to build pipelines.
Speaker 4: In Namibia.
Speaker 5: You know, he wants to get into the power sector
Speaker 5: in Congo.
Speaker 4: He has plans for Zimbabwe.
Speaker 5: So I think the IPO is almost following Dangle expansion
Speaker 5: in several conceptors across the continent.
Speaker 2: And Arjie, can you jump in here just to piggy
Speaker 2: back off of what in Duka is saying. Do you
Speaker 2: get a sense that there is appetite for this IPO,
Speaker 2: I mean, separate from Dangote himself. I mean, the Nigerian
Speaker 2: stock market has had a pretty good twenty twenty six
Speaker 2: so that could provide the tail whend that he needs
Speaker 2: just going into this listing.
Speaker 3: Yeah, Jennifer, you are quite right about that. In ten
Speaker 3: dollar terms, the Nigerian benchmark Index is actually among the
Speaker 3: world's top performers this year. And obviously when investors see
Speaker 3: such gains that itself generates a lot of interest. Just
Speaker 3: look at India, where the market had risen about for
Speaker 3: straight eight years until twenty twenty five. You know, companies
Speaker 3: there raised twenty five billion dollars in IPOs just last year.
Speaker 3: In Nigeria, the last major IPO was seven years ago.
Speaker 4: You know.
Speaker 3: But you've been speaking to a lot of investors and brokers.
Speaker 3: In fact, just this week we were speaking to them
Speaker 3: in Legos. What we are hearing is that there's a
Speaker 3: lot of interest building up about the Denote Refinery.
Speaker 4: IPO.
Speaker 3: Duka mentioned some of the details of the share sale,
Speaker 3: but there are a lot of questions yet to be
Speaker 3: answered for what could become Africa's biggest initial sare sale.
Speaker 4: If you look at what.
Speaker 3: The regulators have done to entice retail investors, they recently
Speaker 3: updated capital requirements to encourage digital subbrokers to reach more users.
Speaker 3: Another data point that may interest Dungote, you know as
Speaker 3: he plans his IPO. In twenty twenty one, just eighteen
Speaker 3: percent of Nigerian adults used a formal financial account to
Speaker 3: save according to the World Bank. That is that figure
Speaker 3: jumped to about forty three percent in twenty twenty four,
Speaker 3: one of the sharpest increases globally. So the question is
Speaker 3: can Dungote turn Nigerian savers into investors. That's what we
Speaker 3: will see as we go along later this year, hopefully. Still,
Speaker 3: there's a lot of work that needs to be done
Speaker 3: before we see more companies really relying on initial sare
Speaker 3: sales to fund expansion in West Africa. Apart from Dungote,
Speaker 3: just to.
Speaker 4: List a few of the issues.
Speaker 3: Liquidity is extremely low in Nigeria and broadly other markets
Speaker 3: on the continent except for South Africa. Of course, there
Speaker 3: is a relatively low trading volume and the key stumbling
Speaker 3: blog is also lack of investor education.
Speaker 4: All right, stick with me, Argent and Duka.
Speaker 2: We're going to take a quick break and when we
Speaker 2: come back, we'll look at the impact and Bonnie's IPO
Speaker 2: had in India and whether dan Gote potentially could spark
Speaker 2: something similar in Africa. Later this year, we'll be right back.
Speaker 4: Welcome back.
Speaker 2: Today, we're digging into the potential IPO from Africa's richest man,
Speaker 2: Elco dan Gote for his Legos oil refinery. At the
Speaker 2: top of the program, I was comparing dan Gote to
Speaker 2: the Indian entrepreneur and Banni and his IPO of reliance
Speaker 2: back in nineteen seventy seven. Argent, ghosh And and Dukajen
Speaker 2: are still with me. Arjit, you were speaking a bit
Speaker 2: before the break about some of the challenges that could
Speaker 2: present themselves for Dangote as he approaches this IPO. When
Speaker 2: we go back to nineteen seventy seven, I don't know
Speaker 2: where you were at that time, but I'm going to
Speaker 2: ask you to do a little bit of a deep
Speaker 2: die for us. Why was that such a game changer
Speaker 2: for investment in India?
Speaker 3: Jennifer, Just to give you a historical perspective, when I
Speaker 3: was growing up in New Delhi in the late nineteen
Speaker 3: seventies and through the nineteen eighties, I used to see
Speaker 3: my father bring home these forms and spend quite some
Speaker 3: time in filling them. Remember there were no computers to
Speaker 3: help at that point of time. These were application forms
Speaker 3: for IPOs. You know, Reliance's IPO was really an inflection
Speaker 3: point for India's equity markets. The share sale is widely
Speaker 3: regarded as the event that introduced equity investing to the
Speaker 3: nation's middle class. The IPO, it attracted some sixty thousand
Speaker 3: retail investors, was heavily oversubscribed and delivered strong early returns.
Speaker 3: If you look at the academic and historical accounts, and
Speaker 3: they suggest that it played a crucial role in expanding
Speaker 3: retail participation. And that was even before the market regulator
Speaker 3: even existed in India. You know that that interest that
Speaker 3: the Ubay Embani, the founder of Reliance, saw he came
Speaker 3: back to the market several times over the next decade.
Speaker 3: Including offering debentures of bonds. Basically that also saw a
Speaker 3: lot of take from investors. I kind of remember seeing
Speaker 3: long queues to invest in IPOs during that time. Capital
Speaker 3: gains helped attract more investors. Reliance shares, for instance, gained
Speaker 3: about fifty percent on debut and by the end of
Speaker 3: the year in nineteen seventy eight they were up some
Speaker 3: four hundred percent. Of course, there were other fact is
Speaker 3: playing a role in the growth of India's capital markets
Speaker 3: during that time, including the Green Revolution which made some
Speaker 3: farmers quite rich, and then there was the gradual opening
Speaker 3: of the economy. Reliance Industries now has some four point
Speaker 3: five million investors. That's about the same number of registered
Speaker 3: investors in Nigeria.
Speaker 2: Wow. So potentially we could see a similar playbook from Dangote.
Speaker 2: I mean, is that sort of Could this be a
Speaker 2: similar moment for Nigeria and for the continent? Then?
Speaker 3: You know, both Amberness and Dungote saw an opportunity in
Speaker 3: building industries based on import substitution and they made their
Speaker 3: fortunes in heavily regulated markets. They benefited from protectionist industrial policies.
Speaker 3: You know, Dunggote started in cement, Amberni started in textiles,
Speaker 3: but both have been disruptors.
Speaker 6: You know.
Speaker 3: Critics of both groups have similar gripes. They have attacked
Speaker 3: them as shrewd tycoons who have used their political connections
Speaker 3: to secure an advantage over competitors, which they have both denied.
Speaker 3: The Banis moved into refining in the late nineteen nineties
Speaker 3: and became really the supplier of fuel to the world.
Speaker 3: Dungote who plans to double his capacity and it could
Speaker 3: match the massive relions refinery in Chamnager in Gujarat, he
Speaker 3: could be in the same position. And given Dungote's enterprise
Speaker 3: size of his enterprise, the IPO can be a pivotal
Speaker 3: moment for Nigeria. Really, the war in Iran probably has
Speaker 3: made the refinery even more valuable. I'll throw some numbers
Speaker 3: at you here, Jennifer. If you look at Nigeria's market
Speaker 3: capitalization as a percentage of GDP, it is currently at
Speaker 3: about twenty two percent. For comparison, India is at one
Speaker 3: point thirty one percent. In South Africa more more than
Speaker 3: two hundred percent. Given that Nigeria has a population of
Speaker 3: more than two hundred million, the opportunity in that country
Speaker 3: is just immense and as Nuka flagged earlier, Africa does
Speaker 3: not have a shortage of capital. You know, he gave
Speaker 3: that figure a four trillion dollars. That's a decent chunk
Speaker 3: of business for businesses to tat. Really, so if you
Speaker 3: look at dangotees, if he's successful with his IPO, that
Speaker 3: may actually entice other companies to tap the market to
Speaker 3: expand and that in return will spur capital formation.
Speaker 4: But then the government needs to remove.
Speaker 3: Obstacles for businesses as well. In Nigeria. We did something
Speaker 3: called the Bloombergs Investors Guide to Africa, which showed that
Speaker 3: Nigeria is riskier than many countries on the continent. Ivory Coast,
Speaker 3: Kenya and Egypt are less risky for investors, for instance.
Speaker 2: And he actually brought that up about consistency and policy
Speaker 2: when we were speaking, and that's what he needs in
Speaker 2: order to continue to invest across the continent. So let's
Speaker 2: just bring it back to the IPO because that's what
Speaker 2: we started with and really that could be a seminal
Speaker 2: moment for Nigeria and also for Dangote himself. This year,
Speaker 2: I again tried to get some more out of Aliko
Speaker 2: dan Gote about what his plans are for his eventual IPO.
Speaker 2: Here's what he told me earlier this week.
Speaker 6: No, it's going to actually deep in the market, and
Speaker 6: we're saying that all Africans should invest and will be
Speaker 6: paying dividends in dullas.
Speaker 4: Arjit, let's just go to you.
Speaker 2: What are you going to be watching out for with
Speaker 2: this eventual IPO and what could potentially be a few
Speaker 2: of the obstacles to actually getting this off the ground.
Speaker 3: Yeah, so I think the key thing for us to
Speaker 3: watch out for is how much is Dangote going to raise,
Speaker 3: what will be the evaluation of the share sale, when
Speaker 3: will he actually go about selling the IPOs? So those
Speaker 3: are the questions that we'll be looking to ask do
Speaker 3: got if he managed to speak to him, and of
Speaker 3: course speaking to others in the market as well. We
Speaker 3: will also be watching out for if this kind of
Speaker 3: triggers other companies to come forward with IPOs. We'll be
Speaker 3: watching for. The Nigeria and regulators plan to review three
Speaker 3: float rules. For instance, you know, many of Nigeria's largest
Speaker 3: listed firms are very tightly held by controlling shareholders, which
Speaker 3: kind of limits liquidity and heightens the risk of sharp
Speaker 3: swings in prices and scares investors really. You know, if
Speaker 3: you take example of buas Ciments for instance, that company
Speaker 3: has a public shareholding of less than three percent. If
Speaker 3: a large investor sells even a small amount of shares,
Speaker 3: it can lead to a massive price swing. Just as
Speaker 3: we were talking about, you know, comparing with India, India
Speaker 3: mandated listed companies to maintain a minimum public shareholding of
Speaker 3: twenty five percent, and that's rarely helped broaden the market. Finally,
Speaker 3: it's not just IPOs. Regulators need to strengthen market infrastructure
Speaker 3: with depositories, strong disclosures. It needs to expand investor participation
Speaker 3: with simple low ticket mutual funds and ETFs. Again, comparing
Speaker 3: with India, investors can buy mutual funds or collective investment
Speaker 3: schemes as they're called in many countries here in Africa
Speaker 3: for as little as two hundred and fifty rupees that's
Speaker 3: less than three dollars of three thousand, five hundred naira
Speaker 3: a month. That's what is really driving markets in that
Speaker 3: nation now, and Nigeria rarely needs to kind of step
Speaker 3: up and get more investors into the fold.
Speaker 2: And thanks again so much to Argic Ghost, our managing
Speaker 2: editor for Africa and Duka or Ginmo, our reporters in
Speaker 2: Abuja for joining us this week on the podcast. You
Speaker 2: can find more of our coverage of Aliko dan Gote
Speaker 2: on Bloomberg platforms. Now here's some of the other stories
Speaker 2: we've been following across the region this week. South African
Speaker 2: farming group Keru Pistachios is ramping up output to capitalize
Speaker 2: on surging prices and compete with the world's biggest producers.
Speaker 2: The nuts used in ice cream and chocolate climbed to
Speaker 2: the highest level in almost a decade this month, as
Speaker 2: the conflict in Iran, the world's second largest grower, disrupt
Speaker 2: supplies in an already constrained market, and the Africa Finance
Speaker 2: Corporation and the African Development Bank committed five hundred million
Speaker 2: dollars each to a railway that will connect zambiaz copper
Speaker 2: mines to global markets through the Angola Port of Libido.
Speaker 2: You can follow these stories across Bloomberg, including the Next
Speaker 2: African Newsletter. Will of course put a link to that
Speaker 2: in the show notes. This program was produced by Adrian
Speaker 2: Bradley and tia Adebayo. Don't forget to follow and review
Speaker 2: the show wherever you get your podcasts, but for now
Speaker 2: I'm Jennifer's abisojet. Thanks, as always for listening.