Ndubuisi Egwim analyzes the Dangote Refinery, a $14 billion Nigerian oil project, and whether its IPO or secondary market entry makes sense. He weighs operational risks, debt, and currency exposure for diaspora investors, then shares his own buy-or-wait decision.
Dangote Refinery could become one of the greatest businesses ever built in Africa and still be a poor investment at the wrong price. So while I'll show you where I'm leaning towards, I'm not going to tell you to buy it and I'm not going to tell you to stay away. What I'm going to do in this video, I'll share my thinking around it and also the decision I'm making towards buying. And if I'm going to buy or not buy, how much I'm going to be buying or how I'm going to determine how much risk exposure. We'll look at the business, the extraordinary numbers it has recently reported, the debt, they've got some debt as well, the roughly $14 billion expansion plan, the valuation, and of course, what could go wrong, because I have to look at both sides of the coin. And there's one more thing. If you're Nigerian but living abroad, perhaps in the UK, Europe, the US, Canada, Australia, or elsewhere, the next bit is crucial. There's one extra calculation I think you absolutely need to make. Because making money in naira doesn't necessarily mean you've made money in pounds or dollars. I'll show you exactly what I mean using my own Dangote investment from 20 years ago, comparing it to naira and dollars now. By the end, I'll tell you what I'm personally thinking: buy the IPO, wait for it to hit the secondary market, or perhaps do a little bit of both, or stay away totally.
