Lamu refinery plan gets boost with Dangote's Sh130b underwriting

Dangote Foundation President Aliko Dangote during the 23rd edition of the Doha Forum 2025 at the Sheraton Grand Doha Resort & Convention Hotel in Doha, Qatar, on December 6, 2025. [AFP]

President William Ruto's ambitious plan for a second Dangote refinery in Lamu has received a major boost after the successful completion of a $1 billion (Sh130  billion) underwriting programme for Dangote Petroleum Refinery, now structured as a single global initial public offering covering both the Nigerian plant and the proposed Kenyan facility.

The underwriting, announced on Tuesday, comprises a fully funded $600 million (Sh78 billion) private placement and a $400 million (Sh52 billion) commitment to support the refinery's planned IPO.

The programme was structured by Marob Strategies and Consulting DIFC Ltd and Lilium Capital Group, appointed as co-financial advisers.

The Standard has learned that the IPO is structured as a single global offering covering both the Nigerian refinery and the proposed Lamu asset, meaning the Kenyan project will directly benefit from the $1 billion underwriting programme.

In IPO transactions, underwriting is a service offered by financial firms to guarantee the sale of a company's shares to investors. The underwriter in this case, Pan-African Refinery Investment SPV, a subsidiary of Lilium Capital commits to buying any shares not taken up by the public, providing certainty to the issuing company.

This de-risking mechanism is crucial for mega-projects like Dangote's refineries. It ensures smooth implementation by giving sponsors confidence that capital will be available regardless of market conditions, a critical factor for investors who might otherwise hesitate to commit billions to large-scale industrial projects in Africa.

Dangote has confirmed that groundbreaking for the 700,000-barrel-per-day Lamu refinery will take place next month. The project's estimated cost has been revised downward to between $15.5 billion (Sh2.01 trillion) and $16 billion (Sh2.08 trillion), from an earlier $17 billion (Sh2.21 trillion), with lessons from the Lagos refinery helping to reduce costs. Construction is expected to take less than four years.

The refinery would become East Africa's largest and the second-largest on the continent after Dangote's Lagos plant. It is expected to supply refined petroleum products to Kenya and neighbouring markets including Uganda, Tanzania, South Sudan, Ethiopia, Rwanda, Burundi and the Democratic Republic of Congo, all of which currently rely heavily on imported refined fuels.

President Ruto has made the Lamu refinery a centrepiece of his industrialisation agenda. In July, he confirmed he had reached an agreement with Aliko Dangote to proceed with the project. "Kenya will now build the East African refinery here in Lamu, where we will need 60,000 young people to work," Ruto said.

The government has allocated Sh21.5 billion as seed capital for the project, with Deputy President Kithure Kindiki tasked with coordinating the government's engagement with investors. The refinery is expected to strengthen Kenya's ambition to become a regional energy and logistics hub, leveraging the Lamu Port-South Sudan-Ethiopia Transport (Lapsset) corridor.

The Lamu refinery will be financed through a 30 per cent equity and 70 per cent debt mix. Dangote said he expects no fundraising difficulties. The single global IPO structure means proceeds from the offering will support both the Nigerian and Kenyan assets, providing a unified capital-raising platform for Dangote's refining empire.

The $400 million IPO underwriting commitment will be implemented upon the launch of the IPO, subject to market conditions and regulatory approvals. Marob Strategies and Lilium Capital are now coordinating the distribution of the underwriting participation across "Global Africa," engaging sovereign wealth funds, governments and institutional investors.

Marob Strategies, chaired by former Afreximbank president Prof Benedict Oramah, is led by chief executive officer Brian Kiai, a former deputy director at Kenyan investment firm Centum Investment Company.

The transaction reunites two veterans of the African Export-Import Bank. Professor Benedict Okey Oramah, who led Afreximbank for a decade until 2025 and was the single largest financier of the Dangote refinery, now chairs Dubai-based Marob Strategies. Simon Tiemtoré, who previously headed corporate finance at Afreximbank, chairs Lilium Capital Group.

"The level of interest confirms the appetite for African-led capital markets transactions that provide investors with access to transformative assets on the continent," Oramah said.

Beyond the immediate fundraising, advisers said the programme could support industrialisation, energy security, import substitution and deeper African capital-market integration. Kenya stands to benefit significantly from energy security, reduced reliance on imported refined petroleum products, job creation for 60,000 young people, and a strengthened position as a regional energy and logistics hub.

Aliko Dangote, Africa's richest man, called the underwriting "an important milestone for DPRP and for African capital markets". "The work undertaken by Marob Strategies and Lilium Capital has also created a platform for broader participation by African and Caribbean sovereign wealth funds, governments and institutional investors across Global Africa," he said.

The IPO is expected to receive regulatory approval in the coming weeks and list on the Nigerian market in October, with other African capital markets also involved. The $400 million IPO underwriting commitment will be implemented upon the launch of the IPO, subject to market conditions and regulatory approvals.