Dangote IPO will boost capital market, encourage more investments — Economist

An economist, Dr Nathaniel Oladunjoye, says the Dangote Group’s Initial Public Offering (IPO) will deepen participation in Nigeria’s capital market and encourage more companies to offer shares.

Oladunjoye, Senior Lecturer, Department of Economics, Obafemi Awolowo University, Ile-Ife, said this in an interview with our reporter on Tuesday in Abuja.

He said the IPO would provide ordinary Nigerians, private investors and corporate organisations an opportunity to become part-owners of the industrial group.

“The IPO is simply for the citizens and other investors to be a co-owner of the Dangote industry through ownership of shares and all that.

“I have seen that a lot of people have subscribed to the IPO and that shows a lot of interest because people have been monitoring Dangote’s steady growth over the years,” he said.

The economist said strong investor participation demonstrated confidence in the group’s growth and could motivate more Nigerians to invest in listed companies.

He said the IPO could also enhance the credibility and efficiency of the Nigerian capital market.

“Just like the argument of the regulators, it is going to make things tickle.

“So, as I said, the IPO is going to lead to a lot of influence on the Nigerian Stock Exchange and all of that,” the expert said.

According to him, the inflow of investment through the offering would provide credibility and respect to the Nigerian capital market.

He added that the development could encourage other companies to consider initial public offerings and broaden investment opportunities.

“The IPO may also serve as a driver to other companies that have their stocks to now also sell their shares in terms of IPO and all that.

“So, it is always a welcome development,” he said.

The economist, however, said the benefits of the IPO should extend beyond Dangote Group to support broader industrial development.

He urged government to create structures that would encourage more mega-industrialists to emerge across different sectors of the Nigerian economy.

It was reported that the IPO of Dangote Petroleum Refinery and Petrochemicals (FZE) was unveiled on Sept. 14.

The ceremony witnessed the Nigerian Exchange Ltd. formally opening the N2.15tn IPO of FZE.

The IPO comprises 4.1 billion new ordinary shares offered at N525 per share, with a minimum subscription of 10 shares valued at N5,250.

The offer is scheduled to close on Oct.13, subject to the terms contained in the prospectus.