Africa IPOs to push ahead, says Baker & McKenzie

By Kathryn Higgins

01 March 2016 at 11:15 BST

A new forecast released today by global law firm Baker & McKenzie has predicted that listings on the African continent will hit a five-year-high over the next twelve months, defying shrunken commodity prices and capital flight from emerging markets.


There are currently 18 initial public offerings in the pipeline for the coming year, with a projected capital raising of $3.15bn. Though the total number of listings is down from the 21 recorded last year, the total value of the pipeline is almost double the $1.6bn raised through African IPOs in 2015. Furthermore, 2016 may bring the first ever IPO valued above $1bn in Africa: Nigeria's Interswitch, a digital payments and commerce company, is eyeing up a dual-list in London and Lagos later this year which could result in a $1bn or more post-float valuation and Africa's first public Fintech company.

Steady recovery in challenging times

The IPO outlook for Africa is the most optimistic seen in the last five years. After a bumper year in 2010 delivered 21 listings with a total capital raising of nearly $4.5bn, IPOs on the continent suffered a heavy decline over the next few years and failed to together raise more than $800m in any given year until 2014. The 2016 pipeline is poised to deliver the continent's strongest IPO result since 2010. More optimistic still is that a growing number of companies are taking the plunge this year despite difficult market conditions. 'These are challenging economic times for those of Africa's economies dependent on commodities for much of their income, while so called “hot money” flows out of emerging market funds investing in Africa,' said Baker & McKenzie global head of capital markets Koen Vanhaerents.

Hot spots to watch

Apart from Nigeria's potentially record-breaking Interswitch float, the West African rail loop project Blueline is predicted to raise $552.5m when it hits the Euronext Paris exchange later this year. As in previous years, Egypt and South Africa are the markets to watch for IPO activity in 2016. Egypt's pipeline includes at least seven new listings with projected total capital raising around the $1bn mark, including consumer staples giants Food Industries Holding and Arabian Food Industries, which are expected to raise $393.5m and $279.7m respectively. South Africa's status as an IPO hub may be slipping slightly, with the number of expected IPOs dropping from nine to two year-on-year and the total capital raising from $401.7m to a predicted $306m.


Also read...

New kids on the block

Fieldfisher has launched Cummings Fisher as a specialist hedge fund, derivative and alternative investment management-focused law firm.