South Africa’s Johannesburg Stock Exchange (JSE) led African exchanges in IPO transactions and capital raised in the past five years, amounting to $2.7 billion.
In the period under review, there were 105 IPOs, raising $6.1 billion by African companies on exchanges worldwide and non-African companies on African exchanges, with the top 10 African IPOs by value in 2015 taking place in South Africa and North Africa, namely Egypt and Morocco.
This is according to a 2015 Africa Capital Markets Watch report released Monday, February 1, by PricewaterhouseCoopers (PwC), which analysed equity and debt capital markets transactions that took place between 2011 and 2015 on exchanges throughout Africa, including transactions by African companies on international exchanges.
Equity capital markets (ECM) transactions included in the analysis comprise capital raising activities, such as initial public offerings (IPOs) or further offers (FOs), by African companies on exchanges worldwide, as well as those made by non-African companies on African exchanges. Debt capital markets (DCM) transactions analysed included debt funding raised by African companies and public institutions.
In second place in IPO terms was Bourse de Tunis in Tunisia with 23 issuances; while in second place by capital raised was the Egyptian Exchange with $861 million.
In third place in terms of volume was the Casablanca Stock Exchange with seven issuances, and third by capital raised was the Nigerian Stock Exchange with $751 million, over 70 percent of which relates to the 2014 Seplat IPO.
“The JSE remains a significant anchor of African capital markets activity, with a ranking of second in the world for exchange regulation and a leading global ranking for ease of raising debt and equity capital, according to the World Economic Forum’s Global Competitiveness Report 2015-2016,” said Coenraad Richardson, PwC South Africa capital markets partner.
Since 2011, capital raised from IPOs by companies on the JSE represented 45 percent of the total African IPO capital and 33 percent of the total transaction volume.
In 2015, capital raised from IPOs by companies on the JSE in dollar terms decreased by 11 percent as compared with 2014, largely due to the weakening of the South African rand during the year, while capital raised from IPOs by companies on other African exchanges in dollar terms increased slightly by 3 percent as compared with 2014.
In terms of volume, the JSE saw a 33% increase in the number of IPOs in 2015 as compared to 2014, and listings on the JSE more than doubled.
On sector basis, the financial services sector continued to dominate the African IPO market during 2015 at 46% of total value and 50% of total volume, followed by industrial, healthcare and consumer goods sectors in terms of value, the report further read.
Abuot 72 percent of 2015 IPO value and 54 percent of IPO volume was carried out during the first half of 2015, reflective of the relatively higher levels of consumer confidence as compared to the second half of the year.
As compared to 2014, the year 2015 showed a steady overall increase in IPOs of 12 percent in terms of transaction volume and 17 percent in terms of dollar denominated value.
“As at 31 December, 2015, African exchanges had a market capitalisation of about $1 trillion, with 23 percent of this value residing on exchanges outside of South Africa, suggesting that untapped value remains in Africa’s capital markets,” said Nicholas Ganz, PwC Africa capital markets leader.
In the corresponding period, there were 441 African ECM transactions raising $41.3 billion, while in 2015, a total of $12.7 billion was raised through ECM activity across the continent, apart from 336 FOs raising $35.2 billion by African companies on both African and international exchanges.
In 2015, capital raised from FOs by companies on the JSE increased by 17 percent in dollar terms, whereas proceeds from FOs on other African exchanges decreased by 30 percent from $1.2 billion in 2014 to $827 million in 2015.
Between 2011 and 2015, capital raised from FOs by companies on the JSE represented 85 percent of the total African FO capital raised and 67 percent of the total transaction value.
The Egyptian Exchange and the Nigerian Stock Exchange, both in terms of FO volume and value, followed this.
