African capital markets activities suffered 40% decline —PwC
Despite starting on a positive note with some landmark transactions, African capital markets activities declined by 25 per cent in volume and 40 per cent in value last year, a new report by PwC has said.
PwC, in its 2018 African Capital Markets Watch report, said African equity capital market activity in 2018 declined in the wake of global and local economic and socio-political uncertainty.
PwC Capital Markets Partner, Andrew Del Boccio, said, “The positive trend recorded in 2017 in overall equity capital market activity, in terms of an increase in volume and value, was not sustained in 2018 despite the strong market indications at the beginning of the year.
“While 2018 started with several landmark initial public offerings and further offers, as the year progressed, companies retreated from the capital markets or suspended listing plans as uncertainty and volatility increased across Africa and the globe.”
According to the report, $2.2bn was raised in 17 IPOs in 2018 compared to $3.1bn raised via 30 IPOs in 2017, representing a year-on-year decrease of 43 per cent and 27 per cent in volume and value of IPOs, respectively.
Further offers activity also declined both in volume and value, as $6.1bn was raised in 77 FO deals in 2018 compared to $10.7bn raised in 95 deals in 2017.
The financial sector constituted 53 per cent of the total number of IPOs recorded in 2018, followed by the consumer services sector with 17 per cent.
The sector also dominated the number of FO deals and proceeds recorded, contributing 41 per cent and 47 per cent, respectively.
According to the report, South Africa continues to lead African capital markets activity despite the challenges facing the country’s economy.
It said since 2014, capital raised from 43 IPOs recorded on the Johannesburg Stock Exchange was $5.9bn, representing 57 per cent of total African IPO capital raised, and 34 per cent in terms of transaction volume.
“Over the five-year period, the JSE was followed in terms of volume and value of IPO transactions by the Egyptian Exchange with 17 issuances accounting for $1.6bn. Third place in terms of volume was the Bourse de Tunis with 12 issuances, and third in terms of value was the Nigerian Stock Exchange with $571.1 million,” PwC said.
It said over the past five years, there had been 130 IPOs by African companies on both African and international exchanges, raising $10.7bn, a 14 per cent increase in capital raised over the preceding five-year period, 2013-2017.
The firm said South African companies also continued to dominate FO activity in 2018, accounting for 63 per cent of FO proceeds and 49 per cent of FO volume.
Over the past five years, there have been 413 FOs by African companies, raising $44.7bn on both African and international exchanges, a two per cent increase in capital raised over the preceding five-year period, 2013-2017, according to the report.