Nigeria's Dangote raises $2.5bn to expand Africa's largest refinery

Nigeria's Dangote mega-refinery Thursday said it has secured $2.5 billion in investment from private investors to fund its expansion plans, as it widens its refining business to east Africa.

The private equity investment gives investors a slice of the 650,000 barrels-per-day refinery launched two years ago and is currently the largest on the continent.

Until the completion of this investment round, only the Nigerian government-controlled oil corporation NNPCL held a piece of the company, owning about 7.2 percent stake.

The investment is "believed to be the largest publicly disclosed private investment in Africa," Dangote Petroleum Refinery and Petrochemicals said in a statement.

The private placement is a precursor to the initial public offer where investment in the refinery would be open to the public later in the year, analysts said.

The company's founder and Africa's richest man, Aliko Dangote, said the funds from the private placement will help raise "capital to complement … internal cash flows and external funding" as the company "advances its expansion agenda".

Dangote plans to more than double the refining capacity of its Nigerian operations from 650,000 bpd to 1.4 million bpd -- making it the largest refinery globally, surpassing India's Jamnagar Refinery.

Dangote is planning to build a 700,000-bpd East African oil refinery in Lamu on the Kenya coast.

Africa currently imports more than 70 percent of its refined fuel and some $230 billion worth of essential goods, including food, plastics, steel, and fertiliser each year, Africa Finance Corporation (AFC) said in a report in April.

With the additional funds, Dangote said the company is aiming to reduce "Africa's reliance on imported refined products" and strengthen the "continent's energy security."