African IPO Market Realizes Strong Numbers In 2014 – PwC Report

Written by Staff

Feb 03, 2015

PwC’s inaugural publication on the subject, IPO Watch Africa 2014, has found that $11 billion was raised in 2014 in the African equity markets across the continent, almost equal to the combined money raised in the whole of 2012 and 2013, which totalled $11.1 billion. During 2014, IPO activity also increased overall in number from 20 to 24 IPOs, and doubled in terms of capital raised to $1.7 billion from $0.8 billion in 2013.

The report analyses equity capital market transactions that took place between 2010-2014 on exchanges throughout Africa, as well as transactions by African companies on international exchanges.

“The performance of African markets was strong in 2014, with an increase in equity capital market activity of 40 per cent in terms of volume of offers and 100 per cent in terms of capital raised when compared with prior year activity. We noted a few instances of management following a dual-track approach aimed at maximising value for existing shareholders, and consistent with the growth in other forms of capital raising activity across Africa,” Nicholas Ganz, PwC Africa Capital Markets Leader, said.

The report shows a significant share of capital was raised in markets outside of South Africa, with Johannesburg listings accounting for only 32 per cent and 44 per cent of total IPO capital raised in 2013 and 2014, respectively, a notable departure from its more prominent position in prior years.

Coenraad Richardson, PwC South Africa Capital Markets Partner, notes a counterpoint in respect of further offers (FOs), saying, “While IPO activity across the continent increased its share vis-à-vis the JSE, FOs remained dominated by capital raising in South Africa, which accounted for 87 per cent of proceeds in 2014. This is a reflection of the depth and stability of the South African listed company and investor base, underpinned by a securities exchange regulatory framework ranked number one in the world by the World Economic Forum’s 2014-2015 Global Competitiveness Report.”

Overall, FO activity during 2014 increased by 50 per cent in terms of the volume of transactions and doubled in terms of capital raised to $9.3 billion from $4.6 billion in 2013.