PenCom Grants Special Waiver for Dangote Refinery IPO
By Patience Ikpeme
The National Pension Commission has granted special approval to Pension Fund Administrators (PFAs) to invest pension funds in the planned Initial Public Offering (IPO) of Dangote Petroleum Refinery & Petrochemicals FZE.
The commission disclosed this in a circular signed by the Director of Surveillance Department, Mr. A.M. Saleem, stating that the approval takes immediate effect.
PenCom explained that it granted what is known as “regulatory forbearance” to PFAs under a special dispensation from provisions of the Revised Regulation on Investment of Pension Fund Assets.
Regulatory forbearance means a regulator temporarily relaxes or waives certain rules or requirements to allow a specific transaction or investment to go ahead under special conditions.
In this case, PenCom said it waived some existing conditions relating to the company’s years of existence, profitability record and dividend payment history to enable PFAs participate in the proposed Dangote Refinery share offer.
However, the commission stressed that all other investment safeguards and regulations remain in place.
According to the circular, “This dispensation involves waiving the applicable existence, profitability, and dividend requirements without prejudice to other extant regulatory safeguards.”
PenCom stated that Pension Fund Administrators must still ensure that any investment made under the arrangement complies with their internal investment guidelines, risk management structures and fiduciary responsibilities to pension contributors and retirees.
The commission said it carefully assessed the proposed investment opportunity and considered its possible impact on both the pension industry and the wider Nigerian economy before approving the special arrangement.
According to PenCom, the decision followed a review of requests seeking permission for pension funds to participate in the refinery’s IPO despite the normal regulatory conditions.
The commission explained that several factors influenced its decision, including the strategic importance of the refinery project, its growth potential and the expected economic benefits.
PenCom also noted that it considered the business track record of Dangote Industries Limited, which is the majority shareholder in the refinery company.
The commission described the approval as exceptional and limited strictly to the Dangote Refinery IPO.
It stressed that the decision should not be interpreted as a general relaxation of investment rules for future public offers or other investment transactions.
“The regulatory forbearance granted under this Circular is exceptional, one-off, and strictly case-specific to the Initial Public Offering of Dangote Petroleum Refinery & Petrochemicals FZE. It shall not constitute an automatic precedent for future Initial Public Offerings or other investment transactions,” the circular stated.
The planned IPO is expected to give institutional and retail investors the opportunity to buy shares in the Dangote Refinery, which is regarded as one of the largest industrial projects in Africa.
Industry observers believe the approval could increase institutional participation in the offer, especially from pension fund managers overseeing trillions of naira in retirement savings on behalf of Nigerian workers.
