The African continent through its capital markets raised a total of $9.1bn from Initial Public Offerings of companies on its stock exchanges between 2013 and 2017. For 2017 alone, its IPO proceeds stood at $2.9bn.
PwC revealed this in its 2017 Africa Capital Markets Watch, where it examined African equity and debt capital markets transactions.
A total of 134 IPOs were executed in the continent within the five-year period, with 28 happening in 2017.
For the five-year period, proceeds from Further Offers hit $43.6bn, of which the FO proceeds for 2017 stood at $10.6bn.
Non-local currency corporate bonds raised between 2013 and 2017 was $31.4bn, and for 2017 alone, $7.5bn was raised.
PwC said, “Equity capital markets transactions included in our report comprise capital raising activities, whether IPOs or FOs, by African companies on exchanges worldwide and those made by non-African companies on African exchanges.
“Debt capital markets transactions analysed this year include non-local currency debt funding raised by African companies and public institutions, whether high-yield or investment grade.”
It said the increase in ECM proceeds was 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’ listings on the Johannesburg Stock Exchange 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 per cent between 2016 and 2017 in the United States dollar terms,” the report indicated.
Eurobond activity by African corporates, sovereigns, and supranationals also increased in 2017, and according to PwC, over the past five years, 387 non-local currency debt transactions have taken place by African issuers on international markets, raising $128.1bn, of which 85 per cent was in US dollars.
Non-local currency corporate issuances, it added, totaled $7.5bn, an increase of 68 per cent in terms of value, and 110 per cent 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 per cent, with 2017 accounting for four of the top-10 largest sovereign issuances by value over the past five years.
PwC, thus, explained that, “African ECM activity in 2017 was largely driven by the financials sector for FOs, and consumer services sector for IPOs, although these sectors’ share of total FO value was amplified by the $2.9bn rights issue by Barclays Africa in June 2017, and of the total IPO value by the IPO of Steinhoff Africa Retail Limited, which accounted for 21 per cent and nine per cent of total ECM proceeds during the year, respectively.
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