African IPOs to set tone for private equity exits


Virginia Furness
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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.


Andrew Schultz,

“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 Schultzhead 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.”

Afreximbank on Wednesday announced plans to list D-shares on the London Stock Exchange, joining HTA in marketing a deal at a time when protracted discussions over the UK’s plans to leave the European market have kept most vendors sidelined. 

"Brexit is certainly having an impact on areas of the UK capital markets, but for more global multinationals, this helps show London can still prosper as a financial centre come what may,” says Simon Aird, head of equity capital markets at Renaissance Capital, a book runner on the Helios Towers deal.

“The LSE is one of the big global exchanges, it is the obvious place to go for many companies for a variety of reasons.”

Afreximbank is positioning its share sale as an opportunity to invest in the projected growth of inter-African trade, underpinned by the recently signed African Continental Free Trade Area Agreement.


This should negate concerns over the concentrated country risk which has made investors more wary of the likes of Helios Towers Africa, which operates largely in the Democratic Republic of Congo and Tanzania.

But not all are convinced by this angle.

“It has a funny structure and investors aren’t keen on different classes of shares,” says a banker who is not on the deal.

A couple of investors said if they would like to take Tanzania risk, they would buy Vodacom Tanzania, which is a far more attractive price than Helios is coming at 
 - Banker

Investors will be closely watching the progress of HTA, which is due to close on October 14, and marks Helios’s second attempt at a London listing. Its first, in the first quarter of 2018, was derailed by a large sell-off in emerging market equites and the imposition of a large fine on MTN by the government of Nigeria, spooking investors.

Greater willingness to understand HTA’s operating countries Tanzania and Democratic Republic of Congo, as well as the American Tower buyout of Eaton Towers, have helped boost support for the deal, says a London-based banker.

American Tower’s $1.85 billion purchase of Eaton Towers, which was due to list in London last year before the float was pulled, is seen as a vote of confidence in the sector.


But the progress of the deal suggests it has been challenging. Helios Towers Africa is looking to raise up to $500 million, with leads communicating that the “base deal size is covered”. Arranging banks were forced to revise downwards the pricing, indicating a lack of interest in the deal. HTA is marketing a price range of $1.15-1.45 per share.

“A couple of investors said if they would like to take Tanzania risk, they would buy Vodacom Tanzania, which is a far more attractive price than Helios is coming at,” says the banker. “It [HTA] is a very good business but there are more attractive opportunities out there.”

Both deals follow a summer of mixed fortunes for frontier market international listings. Both Africa Airtel and Jumia ‒ the largest e-commerce operator in Africa ‒ have been blighted by poor performance, while Kazakh tech company Kaspi earlier this week postponed its deal, citing poor market conditions.

Shares in Airtel Africa were last trading at 50.54p, having been priced at 80p at its $540 million offering in June, while shares in Jumia were last trading at $7.6, well below the offer price.