When Dangote is Owing Dangote

THE Dangote Refinery Initial Public Offer (IPO) has turned Nigeria into an investment soiree. At the end of the party, over 10 million Nigerians are expected to have been served.

Many of the prospective investor-attendees are also enticed by the promising menu, they are looking more at the party and less than the host.

At the end of the offer, over N2.15 trillion (over $1.6 billion) is expected to be pooled in what will be the biggest capital issue in the history of corporate Nigeria. The offer only gives 5% away to investors as Aliko Dangote, the promoter, still retaining the status of the majority shareholder with over 87% shareholding interest.

But missing in the reckoning of many of the investors is the status of Alhaji Dangote. He is not just a shareholder in Dangote Refinery; he is also a creditor. At least, indirectly. Dangote Refinery is also owing Dangote Industries about $4 billion as at the time of the company’s IPO, an amount almost 100% higher than the $2.2 billion equity raise. As at the time of filing for its IPO, the refinery held about $5.7 billion total debt, meaning Dangote Industry holds over about 70% of the debt of the new company.

Dangote Oil Refining Company and Dangote Industries and Greenview International Corporation are the vehicles through which Alhaji Dangote holds the majority stake in Dangote Refinery. The other majority shareholder is NNPC, the Nigerian state-owned oil company.

What does this mean for the various stakeholders, including Alhaji Dangotye himself?

“Dangote is both a shareholder and creditor to Dangote. But the intercompany debt will be subordinated to whatever debts Dangote Refinery has because external debts are always more secured. It should also attract less interests”, according to Pat Enwowu of Asset Aid, a financial consulting firm.

Alhaji Dangote is perhaps not unused to collecting dividend and interest from his companies. Information extracted from the latest annual reports of the other listed companies within the Dangote Group show intercompany balances (obligations of companies owed by the same shareholders to one another) at the end of 2025 being over $3 billion (excluding Dangote Refineries). Of course, many of these loans were taken by the holding company from local banks but majorly from multilateral institutions with AFRI Exim Bank holding the lion share.

In dividend, Dangote Industries scooped over N2.1 billion from both Dangote Cement and Dangote Sugar in 2025. The dividend collected is however only 15% of the interest that must have been paid over the same period. Dangote Industries holds 85% and 78% in Dangote Sugar and Dangote Cement respectively.

But the interest and dividend circulating intercompany may not even be the worry for the new investors piling as the IPO continues to make waves investors among institutional and retail investors. “Alhaji Dangote may seek a bigger and strategic play, deepening his equity interest in the company, with the debt being converted into equity in a financial re-engineering move, as events unfold. The debt holding may not just be a lifeline or a support, it could be a strategic tool”, said an investment banker connected to the company who pleaded anonymity.

Some major shareholders use subsidiary or associated company debt as a strategic lever to modulate level of shareholding as the need arises. Beyond being a funding tool. it can also be a stabilising tool for the balance sheet in a season of turbulence or unexpected shock. In the N600 billion Right Issue carried out in 2024, Heineken may have raised its stakes in Nigerian Breweries (NB) by converting some of its foreign exchange debts to its Nigerian subsidiary.

The local capital raise became necessary when NB suffered an N85 billion loss, arising from local currency revaluation of its foreign debt as a result of the devaluation of the naira by the Central Bank (CBN).

Alhaji Dangote may not have played this strategic card before, but it is far from impossible, At almost 90% shareholding, he may have nowhere up to go in Dangote Refineries. But an additional equity needs, especially in the light of the refinery’s ambition to increase capacity by 100% to 1.5 million barrel per day in the five years, may put this ambition to test.