PenCom clears PFAs to invest in Dangote Refinery’s $50bn IPO

The National Pension Commission (PenCom) has granted Pension Fund Administrators (PFAs) regulatory forbearance to invest in the planned $50 billion Initial Public Offering (IPO) of Dangote Petroleum Refinery & Petrochemicals FZE, expected later this year.

In a circular issued to all licensed PFAs and accessed by BusinessDay, PenCom said it had carefully evaluated the strategic investment opportunity presented by the proposed IPO and its potential impact on both the pension industry and the broader Nigerian economy.

According to the commission, the decision followed a review of requests seeking special dispensation that would allow PFAs to invest pension fund assets in the offering.

The Dangote Petroleum Refinery is preparing what is expected to be one of Africa’s largest IPOs, offering a 10 percent equity stake in the $20 billion, 650,000-barrel-per-day Lagos-based refinery to the investing public. The offer is projected to value the refinery at up to $50 billion and will feature dollar-denominated dividends.

The circular, titled ‘Regulatory Forbearance for Investment by Pension Fund Administrators in the Initial Public Offer of Dangote Petroleum Refinery & Petrochemicals FZE,’ was signed by A.M. Saleem, director of the Surveillance Department, on behalf of the Director-General of PenCom.

PenCom stated that, in reaching its decision, it considered the refinery’s strategic importance to Nigeria’s economy, its strong fundamentals, growth prospects, and the wide-ranging economic benefits expected from the investment. The commission also cited the track record of Dangote Industries Limited, the refinery’s majority shareholder, as a key consideration.

“Accordingly, the commission hereby grants a special dispensation from Section 6.2.7.1 (iii) of the Revised Regulation on Investment of Pension Fund Assets. This dispensation involves waiving the applicable existence, profitability, and dividend requirements, without prejudice to other extant regulatory safeguards,” the circular stated.

The commission, however, directed PFAs to ensure that any investment made under the dispensation aligns with their internal investment policies, risk management frameworks, and fiduciary responsibilities to contributors and retirees.

PenCom further stressed that the regulatory forbearance is exceptional, one-off, and strictly limited to the IPO of Dangote Petroleum Refinery & Petrochemicals FZE.

“The regulatory forbearance granted under this Circular is exceptional, one-off, and strictly case-specific to the IPO of Dangote Petroleum Refinery & Petrochemicals FZE. It shall not constitute an automatic precedent for future IPOs or other investment transactions,” the Commission stated.

PenCom added that the circular takes immediate effect and directed that all enquiries regarding the directive be addressed to the Director, Surveillance Department of the commission.