$9.1bn raised in African equity, debt capital markets in four years

by Modestus Anaesoronye

March 9, 2018 | 1:06 am
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Analyzing stock market from a digital computer screen over a detailed diagram. Pointing out some details with a pen.

African equity capital markets (ECM) and debt capital markets (DCM) in four years between 2013 and 2017 raised $9.1 billion proceeds, according to the PwC’s 2017 African Capital Market Watch

The ECM transactions included in the report comprises of capital raising activities, whether initial public offerings (IPOs) or further offers (FOs), by African companies on exchanges worldwide and those made by non-African companies on African exchanges.

African ECM activity in 2017 was largely driven by the financial sector for FOs, and consumer services sector for IPOs, although these sectors’ share of total FO value was amplified by the $2.9 billion rights issue by Barclays Africa in June 2017, and of the total IPO value by the IPO of Steinhoff Africa Retail Ltd (STAR), which accounted for 21 percent and 9 percent of total ECM proceeds during the year, respectively.

Businesses in sectors such as telecommunications, consumer goods and services, financials, and healthcare continued to form a significant component of African ECM activity, reinforcing the growth trend away from resources sector; none of the top-10 IPOs in 2017 were companies in the resources sector.

Further highlights of African capital markets in numbers show that 28 IPOs happened in 2017; 134 IPOs between 2013 and 2017; and $2.9 billion IPO proceeds raised in 2017.

There was also 93 FOs in 2017; 385 FOs between 2013 and 2017; $10.6 billion FO proceeds raised in 2017 and $43.6 billion proceeds raised between 2013 and 2017.

In terms of capital market activity, we expect that the recovery seen in 2017 will gain momentum in 2018, including an increase in cross-border ECM activity for regional players looking to compete globally, the PwC said in the report released Wednesday.

According to the report, increase in ECM proceeds is an evidence of recovery of African capital markets, as 2017 saw a significant improvement in overall ECM activity over 2016 and the impact of some global ECM trends in local markets.

“For instance, 2017 activity included a series of spin-off and Special Purpose Acquisition Companies’ (SPAC) listings on the JSE and other exchanges, as owners tried to realise value and drive new investment opportunities.”

Overall, African ECM transaction volume and value improved in 2017 over 2016. In terms of value, 2017 saw the largest IPO over the trailing five year period, and an increase in the total value of ECM transactions of 49 percent between 2016 and 2017 in US dollar terms.

Further look in the report showed that eurobond activity by African corporates, sovereigns, and supranationals increased in 2017.

Over the past five years, 387 non-local currency debt transactions have taken place by African issuers on international markets, raising $128.1 billion, of which 85 percent was in US dollars.

Non-local currency corporate issuances totaled $7.5 billion, an increase of 68% in terms of value, and 110 percent in terms of volume over the prior year, with several large first time issuers tapping into a market with sustained appetite for emerging market yields.

In comparison to 2016, 2017 saw an increase in total value of sovereign and supranational non-local currency debt issuances of 75 percent, with 2017 accounting for four of the top-10 largest sovereign issuances by value over the past five years.

Modestus Anaesoronye

by Modestus Anaesoronye

March 9, 2018 | 1:06 am
12893  |   93   |   0  |   Start Conversation

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