By Babajide Komolafe

The Dangote Refinery share offer is the rave of the moment in the investment community. However, there are many individuals who, though, are interested in the share offer, they want to know if it is a good investment. Some of them in their desperation for an objective and frank assessment have been reaching out to me, asking for my opinion and advice.

The concern of these individuals is that while they don’t want to regret missing out on what could turn out to be the best investment opportunity of the decade, they also do not want to lose their money in case the expected returns fail to materialise.

Before sharing my opinion about the Dangote Share offer with these individuals, I disclose to them my indifference to buying shares of any particular company. This indifference, which developed over the last two decades, is first based on reality and history. Share prices go up and down, and the market can crash at any time. Also history has shown that any company can fail and investors lose money. The history of the Nigerian capital market is replete with incidents of great companies with good performance that failed. This includes Afribank Plc, which was the first share I bought when I was a teenager. The lesson for me is that the money you should invest in the stock of any company is money you are willing to lose or which you don’t need for a long time. I have not had that kind of money for a long time.

Another reason for my indifference is that there are other alternatives that offer equally or even better returns than buying shares, and with far less risk. But because I also don’t want to completely miss out on whatever boom happening in the stock market, I invest in the market through equity based mutual funds. The fund manager, who takes care of the day-to-day decisions of which stocks to buy and sell, are professionals, trained and licensed to do so, hence as an investor, I don’t need to worry or be apprehensive over the performance of the stock of a particular company.

However, in spite of the above, I believe the DPRP is a good company with great investment prospects, which I will outline in the next edition. But there are also risks, and in fact the prospectus listed 56 risks, which could materially affect the performance of the company, and hence what investors gain from money invested in the company. (To be continued)