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Low domestic capital raising figures, but overall IPO activity grew in Africa in 2018


Johannesburg WED, FEBRUARY 20 2019-theG&BJournal-Baker McKenzie’s Cross Border IPO Index, using data supplied by Refinitiv (formerly Thomson Reuters) shows that, overall, capital raised by African issuers declined by 44% to $1.1 billion in 2018, down from $1.9 billion in 2017. Although 2017 and 2018 both produced nine African Initial Public Offerings (IPOs), the previous year had one megadeal – Steinhoff Africa Retail Ltd, which raised $1.2 billion in Johannesburg – while 2018’s largest deal, Libstar Holdings Ltd, raised $280 million in its May debut, also in Johannesburg.

Cross border capital

The amount of cross-border capital raised in stock exchanges in Africa, however,  grew by 647% year-on-year to $1.3 billion in 2018, up from $70 million in 2017.  The Index shows that the number of cross-border listings in the region increased from one to three IPOs – two of which were by issuers domiciled in the United Kingdom (UK) (Vivo Energy and Quilter), while the other one was a Mauritius-based company (Grit Real Estate). All three cross-border IPOs were dual listed in London and Johannesburg. Due to these cross-border listings in the region, the overall IPO activity in Africa grew.

Wildu du Plessis, the Head of Capital Markets for Baker McKenzie in Johannesburg, says, “It’s good to see that, overall, capital raising on African exchanges picked up a bit in 2018. However, this increase in IPO values can also be attributed to Africa coming off a low base in terms of the cross-border capital raised in 2017.

“Despite the overall increase, capital raising on African exchanges is simply not where it could be if there was more economic and political certainty on the continent,” du Plessis says.

Domestic capital raised by African issuers

Domestic capital raising dropped by $1.7 billion in 2017 to $897 million in 2018, mostly because 2017 figures were artificially inflated by Steinhoff Africa Retail $1.2 billion listing on the Johannesburg Stock Exchange that year.

In 2018, in addition to Libstar, the top domestic IPOs in Africa in 2018 included MTN Ghana’s listing on the Ghana Stock Exchange which raised $243 million and Mauritius-based Grit Real Estate Income Group’s listing in London, Johannesburg and Mauritius, which raised $132 million.

“Domestic capital raising has declined due to political and economic instability in the region.  IPOs are driven by investor sentiment and simply do not happen when markets are unstable,” du Plessis says.

Cross-border proceeds –  African issuers

Cross-border proceeds by African issuers also decreased by 5% year-on-year – from $209 million in 2017 to $198 million in 2018. However, the number of African issuers listing outside their home jurisdictions grew from two issuers in 2017 to three in 2018.

“Cross-border capital raising is seen as a good way for issuers to raise money as it allows them to hedge their bets if their domestic markets are unstable, so we should see an increase in African issuers listing outside their home jurisdictions,” says du Plessis.

Top listings by African issuers in 2018 include Grit Real Estate’s listing in London, Johannesburg and Mauritius, Malta-based Raketech Group Holding plc’s listing on the First North Stock Exchange, which raised $53 million and the dual listing of South African company Kore Potash on the London AIM and Johannesburg Stock Exchange, valued at $13 million.


IPOs by African issuers were mostly from the high technology, materials and real estate sectors in 2018. In terms of capital raised by African Exchanges, the energy and power, financials and real estate sectors dominated IPO activity in 2018.

Du Plessis notes that, “Technology is dominating all the sectors at present, as many of the other sectors reply on investments in technology to move ahead – financial services, retail, energy, are all becoming heavily reliant on technology for their future growth. Africa also has very little technology infrastructure and legacy systems, which creates a positive environment for innovation and new investment.

“A growing middle class in Africa is also leading to an exponential increase in demand for housing, energy and technology, leading to increased investor interest in these sectors,” he adds.

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