Aliko Dangote has acquired a 25 per cent holding in Kenya Pipeline Company (KPC) for roughly $327 million, LEADERSHIP Newspapers reports. The billionaire, who founded and heads Dangote Industries Limited, announced the purchase at an event in London on Wednesday.
According to the report, which cites Bloomberg, Dangote did not specify which of his companies carried out the transaction. He described the acquisition simply as a quarter of KPC's pipeline network used for moving petroleum products.
The disclosure follows a block trade recorded at the Nairobi Securities Exchange (NSE) on Monday. LEADERSHIP Newspapers reports that about 4.5 billion KPC shares changed hands in that transaction, with a value of KSh42.5 billion, or $327.4 million. The company's market valuation stands at approximately KSh163.9 billion.
Why it matters
The deal gives Dangote a foothold in the infrastructure that carries fuel from Kenya's coast to its interior and onward to neighbouring countries. KPC's network stretches about 1,342 kilometres and has the capacity to move an estimated 14 billion litres of products each year, according to the report.
For Dangote, the stake extends a Kenyan presence that already includes a much larger commitment: a refinery project in the Lamu archipelago. LEADERSHIP Newspapers reports that the plant is modelled on his 700,000-barrel-per-day facility in Lagos and is expected to cost between $16 billion and $17 billion. Construction formally began on September 30, with completion targeted around 2030.
The pipeline investment is smaller in scale but sits directly in the distribution chain that the refinery would eventually feed. KPC's system links the port of Mombasa to inland markets and also serves other East African countries.
A privatised pipeline operator
KPC was established in 1973 and started commercial operations in February 1978. For most of its history it was wholly state-owned. That changed earlier this year, when the Kenyan government sold 65 per cent of the company's shares through an initial public offering, and KPC is now listed on the NSE.
The block trade reported on Monday is consistent with a stake of that size changing hands on the exchange. LEADERSHIP Newspapers notes that Dangote's comments in London did not identify the seller or the vehicle used for the purchase.
At the Lamu groundbreaking, President William Ruto said the Kenyan government intends to take an equity position in the refinery through the National Infrastructure Fund, according to the report.
Dangote courts regional investors
Separately, Dangote is seeking East African participation in the listing of his Nigerian refinery. LEADERSHIP Newspapers reports that Dangote Petroleum Refinery & Petrochemicals FZE has set aside close to 20 per cent of its $1.6 billion IPO for investors in the region.
The regional tranche is expected to bring in as much as $300.4 million. It covers about 729 million Global Depositary Receipts priced at KSh53.50 each, following regulatory approvals in Kenya and Uganda.
The two moves point in the same direction: Dangote is tying his refining capacity to East African capital and to the pipelines that move finished product to market. The KPC stake places him inside the logistics network, while the regional share offer invites East African investors into the refinery that would supply it.
What to watch next is whether the transaction is confirmed by KPC or by Kenyan regulators, and whether the regional portion of the refinery IPO reaches its target.
