Renaissance Capital has unveiled a proposed structure that could give Kenyan and other East African investors a local route to participate in Dangote Refinery’s Initial Public Offering(IPO) in Nigeria.
The proposal involves Global Depositary Receipts (GDRs), which would allow Nigerian shares to be held in custody in Nigeria. At the same time, corresponding GDRs are made available to investors through the Nairobi Securities Exchange (NSE).
The proposal does not mean Dangote Refinery has already been listed on the NSE. Instead, it outlines a structure intended to connect the Nigerian share offer with investors in Kenya through the local capital market.
Speaking during the unveiling of the proposed solution on Tuesday, September 29, Renaissance Capital CEO Stanley Kariuki said the firm had been looking for a way to make the opportunity accessible to investors across Kenya and East Africa.
“Our question at Renaissance Capital was simple: how do we enable Kenya and East African investors to participate in this landmark opportunity?” he said.
Kariuki said answering the question required collaboration between 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.
The official also acknowledged the role played by the Nairobi Securities Exchange and the Capital Markets Authority in developing the proposed solution.
“I would like to take this opportunity to thank the Nairobi Securities Exchange, led by the CEO, and the Capital Markets Authority for their support and commitment to ensuring that our local investors have the opportunity to participate,” he said.
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Renaissance Capital to Offer GDRs for Dangote IPO to Kenyan Investors on NSE
Under the proposed structure, Dangote Refinery’s underlying ordinary shares would remain in Nigeria.
The shares would be deposited with a custodian in Lagos, with the custodian confirming the deposit to the appointed Kenyan depositary bank.
GDRs would then be issued against the deposited Nigerian shares and could be listed on the NSE.
The proposed GDRs would settle through the Central Depository and Settlement Corporation (CDSC) in Kenyan shillings, allowing investors to access the investment through Kenya’s capital-market infrastructure.
The Renaissance Capital CEO said the team had to work against a tight deadline because of the limited IPO window.
He added that transparency was another issue the team had to address, particularly around pricing and how investors would be treated.
“Of course, creating this solution came with a number of challenges. First, time. The IPO window is limited, and we had to develop and execute a solution within a very tight timeline,” he said.
“Secondly, transparency. Any product we introduced had to provide clarity on pricing, costs, and the treatment of investors both during and after the IPO.”
The proposed arrangement would also address the currency difference between the Nigerian offer and Kenyan investors.
“Third, currency and foreign exchange consideration. This is fundamentally a Kenyan shilling denominated investment solution, providing access to an offshore opportunity,” he said.
The structure is also intended to widen access beyond large institutional investors.
Kariuki said the team wanted to create a pathway for both institutions and individual investors where possible.
“And finally, access. This opportunity has attracted the attention of the African investment community. We wanted to ensure that participation was not only limited to a particular category of investors, where possible, but we also wanted both institutional and retail investors to have a pathway to participate,” he said.
Key Players Behind the Proposed Dangote Refinery GDR Deal
The proposed transaction brings together several parties with different responsibilities.
Renaissance Capital Africa is identified as the issuer, lead transaction adviser and sponsoring broker. It would advise on the program structure, size, GDR ratio, and pricing while leading the prospectus, valuation, regulatory filings, and investor distribution.
The NSE is identified as the project coordinator, with responsibilities including reviewing the transaction documents and timetable, verifying the issuance and cancellation rules, and confirming readiness for regulatory processes and admission of the GDRs.
Stanbic Bank would serve as the receiving bank and custodian/depositary. It would handle the issuance and cancellation of GDRs against deposited shares and hold the underlying Nigerian shares in segregated custody.
The legal work would be handled by GBA Advocates LLP, while other brokers would be involved in investor eligibility, KYC and anti-money laundering checks, suitability, allocation and distribution.
A registrar would maintain the GDR-holder register, process transfers and payments, and reconcile records with the depositary and custodian.
How the Proposed Dangote GDR Deal Would Link Nigerian Shares to Kenyan Investors
The proposal creates two linked markets.
In Nigeria, the underlying Dangote shares would be held in custody and remain connected to the Nigerian market.
In Kenya, the GDRs would provide an investment instrument that could trade on the NSE and settle through CDSC in Kenyan shillings.
The process outlined in the proposal starts with the Nigerian issuer depositing its ordinary shares with a local custodian in Lagos.
Once the deposit is confirmed, the Kenyan depositary would issue GDRs against the shares.
The GDRs would then be made available on the NSE, allowing Kenyan investors to buy and sell them through licensed local brokers if the proposed structure receives the necessary approvals and becomes operational.
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Kariuki described the initiative as part of a broader effort to connect African investors with investment opportunities on the continent.
“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.”
He added that the proposal was about more than 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.
The proposal comes as interest grows in enabling Kenyan investors to participate in Dangote Refinery’s Nigerian share offer.
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