African IPOs to set tone for private equity exits
Multilateral Afreximbank is set to become the latest African company to list in London, offering investors a rare chance to take on pan-African exposure, but the mixed performance of recent deals as well as difficult market conditions may make it a tough sale.
Afreximbank on Wednesday announced plans to list D-shares on the London Stock Exchange
After Vivo Energy completed in May 2018 the largest Africa-focused IPO to list in London in 13 years, analysts predicted a surge in volumes from the continent. But difficult market conditions and the poor performance of deals from the likes of telecoms and mobile money provider Africa Airtel and New York-listed e-commerce company Jumia have kept volumes muted and investors wary.
Now Afreximbank and Helios Towers Africa (HTA) are looking to provide investors with a more prudent opportunity, and with bankers noting a series of impending private equity exits, the success or failure of these deals will be an important barometer.
“There’s a healthy pipeline coming up but, while there is always demand for great companies, raising money for African companies requires a very focused approach given global challenges,” says Andrew Schultz, head of sales, frontier Africa at Investec in Cape Town.
“The global environment and strong dollar have resulted in attractive valuations for good companies in multiple African markets which represent an opportunity cost for fund managers assessing IPOs.”