NAIROBI, Kenya — Kenyan investors could get a local route to participate in Dangote Refinery’s proposed Initial Public Offering (IPO) in Nigeria through a Global Depositary Receipt (GDR) structure being developed by Renaissance Capital.
The proposed arrangement would allow the underlying Dangote Refinery shares to remain in custody in Nigeria while corresponding GDRs are made available to investors through the Nairobi Securities Exchange (NSE).
The structure does not mean Dangote Refinery has already been listed on the NSE. Rather, it is a proposed mechanism intended to connect the Nigerian share offer with investors in Kenya through the local capital market.
How The Proposed GDR Structure Would Work
Under the proposal, Dangote Refinery’s ordinary shares would remain held with a custodian in Lagos.
The custodian would confirm the deposit of the Nigerian shares to the appointed Kenyan depositary, after which GDRs could be issued against the underlying shares.
The GDRs could then be listed on the NSE, subject to the necessary regulatory approvals and completion of the transaction structure.
If operationalised, the GDRs would settle through the Central Depository and Settlement Corporation (CDSC) in Kenyan shillings, giving local investors access through Kenya’s capital-market infrastructure.
Investors would potentially be able to buy and sell the GDRs through licensed Kenyan brokers.
Renaissance Capital Leads Proposed Structure
Renaissance Capital CEO Stanley Kariuki said the initiative was developed to find a way for Kenyan and other East African investors to participate in the Dangote opportunity.
“Our question at Renaissance Capital was simple: how do we enable Kenya and East African investors to participate in this landmark opportunity?” Kariuki said during the unveiling of the proposed solution on Tuesday, September 29.
He said the structure brought together Renaissance Capital Kenya and Renaissance Capital Nigeria, Stanbic as custodian, Image Registrar, GBA Advocates and Newmark.
Kariuki also acknowledged the involvement of the NSE and the Capital Markets Authority (CMA) in developing the proposed solution.
Proposed Access For Retail And Institutional Investors
Renaissance Capital said the structure is intended to create a potential pathway for both institutional and individual investors, subject to eligibility requirements and the final regulatory framework.
Kariuki said the team sought to ensure that participation would not be limited to a particular category of investors where possible.
The proposal would also address the currency difference between the Nigerian share offer and Kenyan investors by providing a Kenyan-shilling-denominated investment instrument linked to an offshore asset.
Who Would Do What?
Several financial-market institutions would have defined roles under the proposed arrangement.
Renaissance Capital Africa would act as issuer, lead transaction adviser and sponsoring broker. Its responsibilities would include advising on the GDR structure, ratio, size and pricing, as well as coordinating the prospectus, valuation, regulatory filings and investor distribution.
The NSE would serve as project coordinator, including reviewing transaction documents and the proposed timetable and confirming readiness for regulatory processes and potential admission of the GDRs.
Stanbic Bank would act as the receiving bank and custodian/depositary, handling the issuance and cancellation of GDRs against the deposited Nigerian shares and holding the underlying shares in segregated custody.
GBA Advocates LLP would provide legal services, while other brokers would be involved in investor eligibility, know-your-customer and anti-money laundering checks, suitability, allocation and distribution.
A registrar would maintain the GDR-holder register and handle transfers, payments and reconciliation with the depositary and custodian.
Two Markets, One Investment Structure
The proposed arrangement would effectively link the Nigerian and Kenyan capital markets.
In Nigeria, the underlying Dangote Refinery shares would remain deposited with a custodian and continue to be connected to the Nigerian market.
In Kenya, the corresponding GDRs would provide an investment instrument that could potentially trade on the NSE and settle through CDSC in Kenyan shillings.
The process would begin with the Nigerian issuer depositing its ordinary shares with a custodian in Lagos.
Once the deposit is confirmed, the Kenyan depositary would issue the corresponding GDRs. If all required approvals are secured, the GDRs could then be admitted to trading on the NSE.
Kenyan investors would subsequently be able to access the instrument through licensed local market intermediaries, subject to the final terms, eligibility requirements and regulatory approvals.
Timing And Transparency Among Key Considerations
Kariuki said the proposed transaction had been developed under tight timelines because of the limited IPO window.
He identified time, transparency, foreign exchange and investor access as some of the key challenges in creating the structure.
He said investors would need clarity on pricing, costs and how their interests would be treated both during and after the IPO.
The Kenyan-shilling structure is also intended to simplify access to an investment opportunity denominated in another currency, although investors would still be exposed to risks associated with the underlying investment and the Nigerian market.
Broader African Capital Markets Push
Kariuki described the proposal as part of a wider effort to connect African investors with investment opportunities across the continent.
“The solution we are proposing, a GDR structure, demonstrates what can be achieved when the capital markets institutions, regulators, custodians, advisors, investment banks come together around a common objective,” he said.
He said the initiative was intended to go beyond the Dangote transaction by helping integrate African capital markets and make it easier for investors to access opportunities within the continent.
