Dangote Refinery IPO: PenCom relaxes rules for PFAs Participation

BY BONNY AMADI

The National Pension Commission (PenCom) has relaxed its shares investment rules to allow pension fund administrators (PFAs) to participate in the Dangote refinery initial public offering (IPO) expected later in the year.

The move was communicated to all licensed pension operators in a circular seen by our correspondent.

The regulatory forbearance specifically targets provisions in Section 6.2.7.1 (iii) of the revised regulation on investment of pension fund assets.

Based on the law, pension fund assets can only be invested in ordinary shares of public limited or private companies if the firm has an “operating track record of having made taxable profits for at least three out of the five years preceding the investment, and paid dividends or issued bonus shares for at least one out of the five years.

However, with the circular, PenCom has now suspended that regulation to ensure pension operators can invest in Dangote Petroleum Refinery & Petrochemicals FZE (DPRP) — an organisation yet to meet the requirements as prescribed by the law.

Explaining the rationale for the policy, the commission said it carefully evaluated the “strategic investment opportunity and the economic impact” of the proposed IPO on the pension industry and the broader economy

In light of these considerations, the Commission has reviewed the request for a special dispensation that would permit Pension Fund Administrators (PFAs) to invest pension fund assets in the IPO,” the circular reads.

“In reaching its decision, the Commission considered DPRP’s strategic importance, strong fundamentals, and wide-ranging economic benefits, and the growth potential. The Commission also took into account the record of Dangote Industries Limited, DPRP’s majority shareholder.

Accordingly, the Commission hereby grant 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 regulator said the circular takes effect immediately.

PenCom also asked PFAs to ensure that all investments made under the dispensation are undertaken in line with their internal investment policies, risk management frameworks, and fiduciary duties to contributors and retirees.