Africa Capital Markets Watch

06 April 2017

Our latest Africa Capital Markets Watch report examines equity and debt capital markets transactions that took place between 2012 and 2016 throughout Africa, as well as transactions by African companies on international exchanges.

CMW

African Equity Markets
As anticipated, African equity markets faced a challenging year in 2016, amidst economic uncertainty and political upheaval around the globe. Equity capital markets (ECM) broke its three year streak of successive growth, with a decline in overall ECM activity of 28% from 2015 in the number of transactions and 33% from 2015 in terms of capital raised. Analysis on a quarterly basis revealed a rebound in market sentiment in the second half of the year, which comprised 80% of 2016 IPO capital raised. This increase in ECM activity, particularly IPOs, suggests a growing level of optimism amongst issuers and investors as the year progressed.

African IPO Market
The data shows that while 2016 saw a decrease from the prior year, there has been on overall upward trend in IPO activity, demonstrated by a 7% increase in capital raised over the preceding five-year period. Between 2012 and 2016 there were 110 IPOs raising $6.5bn by African companies on exchanges worldwide and non-African companies on African exchanges. The comparative strength of the rand has been a key driver of capital raised from IPOs on the Johannesburg Stock Exchange (JSE) which experienced an increase of 25% compared to 2015. Consequently, the JSE retains the leading position in the African capital markets, representing 42% of the total African IPO capital since 2012. Capital raised from IPOs by companies listed on other exchanges decreased by 22% compared to 2015, largely as a result of a significant slowdown of IPO activity on the Egyptian Stock Exchange. Sector analysis shows that the FS sector continued to dominate the IPO market in 2016, followed by consumer goods and industrials.

African Further Offers (FO) Market
As was the case with the IPO market, FO activity was hit by a substantial decrease in terms of transaction volume and value, down 27% and 34% respectively, reflecting many of the challenges and uncertainties globally. 85% of FO proceeds in 2016 were raised either by South African companies or foreign companies listed on the JSE. Nigerian FO activity dried up, with no further offers in 2016, largely as a result of the ongoing recession and the exchange rate environment. Again, FS dominated the FO market, followed by the healthcare sector. During the five year period from 2012, average FO capital raised per transaction of $113 million exceeded the IPO average of $59 million.

African Debt Markets
Expanded borrowing by the African Development Bank has driven a slight increase in debt capital markets (DCM) proceeds in 2016. Further analysis shows that DCM activity by sovereigns and corporates shrank and issuances were targeted more towards refinancing or repayment of existing obligations. In the 2015 publication, bond activity on local capital markets made up a small portion of total DCM activity, however, as corporates across the continent retreated from risks related to foreign currency funding in 2016, and as global appetite for African debt securities declined, local markets played a more significant role in the overall DCM story, particularly in Nigeria.

The full publication delves deeper into capital market activities during 2016 and the five year period 2012-2016. Please visit http://www.pwc.co.za/en/publications/africa-capital-markets-watch.html for more.

Twitter
LinkedIn
Facebook
Google+

Comments

Very informative

Very detailed article.

very nice

the way to make money. awesome article

I will think that, if Africa continent was to embrace Agriculture full time, then this borrowing would be past tense. Agriculture is one field if build well and support in full force it can change this continent to developed state.
So I leave it for the heads of states and bring their heads together and look at the fate of Agriculture as one state.

Very Informative article

good post

Click here

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment