Several Nigerian investment platforms struggled shortly after the Dangote Refinery’s public share offer opened, as investors rushed to buy into one of the country’s biggest-ever capital market deals.
Bamboo, Cowrywise and InvestNaija were among the platforms where users reported difficulties. Bamboo said traffic on its platform jumped about 10 times within 30 minutes of the offer opening. The company said the sudden increase in customers also put pressure on some of its third-party service providers.
The problems came as the Dangote Petroleum Refinery and Petrochemicals FZE began its ₦2.15 trillion initial public offering, with 4.1 billion shares being offered at ₦525 each.
So why did a share offer lead to problems on investment apps?
A lot of people were trying to get in at once
The Dangote IPO has been marketed to ordinary Nigerians, not just large investors.
The minimum subscription is 10 shares, which costs ₦5,250. Investors can apply for additional shares in multiples of 10. The offer opened on September 14 and is scheduled to close on October 13.
Also Read: Dangote Refinery IPO: What It Means for Nigerian Investors
That relatively low entry point has opened the offer to people who may never have bought shares before.
Dangote is also targeting a very large retail investor base. The company has spoken about attracting as many as 10 million investors.
That meant investment platforms were dealing with a different kind of demand. Instead of the normal flow of customers, large numbers of people were trying to log in, complete their KYC, fund accounts and submit applications around the same time.
The result was a sharp increase in traffic.
Investment apps depend on other systems too
An investment app is not the whole transaction.
When someone applies for shares digitally, several systems can be involved in getting the transaction completed. The platform may have to communicate with payment providers and other service providers, while customer identification and account information also have to be checked.
So if traffic suddenly jumps, pressure can spread beyond the app itself.
That is what Bamboo said happened when the Dangote offer opened. The company said the increase in customers and repeated attempts to complete transactions contributed to the pressure on its systems and third-party providers.
The disruption therefore does not necessarily mean that the platforms were unable to handle normal trading activity. The Dangote offer created an unusually large burst of demand.
What exactly are investors buying?
The ₦525 price is for one Dangote Refinery share.
At the minimum subscription, an investor applies for 10 shares and pays ₦5,250.
But paying for an application does not automatically mean the investor has bought the shares.
The offer first has to close. Applications are then processed and shares are allotted according to the terms of the offer. If shares are allotted, they are recorded in the investor’s account and the person becomes a shareholder.
The offer is also not a guarantee of profit.
Once the shares begin trading, their market value can go up or down. Dividends are also not guaranteed. They depend on the company’s performance, cash requirements and decisions by its board.
The rush has another problem
The huge interest in the IPO has also created an opportunity for fraudsters.
The Securities and Exchange Commission warned investors to use only approved receiving agents and subscription channels. It also warned against unsolicited WhatsApp messages, emails, social-media adverts and other offers promising guaranteed allocations or preferential access.
The warning is important because an investor who cannot get through an investment app may be tempted to look for another way to submit an application.
That is where caution becomes necessary.
The SEC said investors should verify the registration of any company, platform or person offering investment services before sending money or personal information. The official Dangote IPO website also warns investors to use only approved channels and says it will not ask for a PIN, password or OTP.
What the outage tells us
The Dangote IPO has brought a large number of Nigerians into the stock market at the same time.
That is good news for participation, but it also put the country’s digital investment infrastructure under pressure.
The platforms have since stabilised, according to Reuters, but the early problems showed what can happen when a major public offer suddenly sends a large wave of new investors into digital investment channels.
For investors, the main lesson is simpler: a rush to buy shares does not remove the need to understand what is being bought, how allotment works and where the application is being submitted.
And for Nigeria’s investment platforms, the Dangote IPO has provided a real-world test of whether their systems can cope when retail interest suddenly moves from thousands of users to potentially millions.
