Economy

Africa Records Zero IPOs in H1 2021

Published

3 years ago

23/06/2021

A new report has revealed that in the first half of 2021, African exchanges did not record any cross-border Initial Public Offerings (IPOs).

However, the continued global demand for special purpose acquisition company (SPAC) IPOs reached African shores in the period under review, with a cross-border listing from a South African SPAC issuer, African Gold Acquisition Corporation, into the New York Stock Exchange.

In the new Baker McKenzie analysis, H1 IPO Snapshot: Unfolding Trends for 2021, it was noted that globally, the continued demand for SPAC deals, as well as current high liquidity and investor enthusiasm, caused capital raising to surge to new highs in H1 of 2021, with the bulk of companies preferring to list their IPOs locally.

A total of 1,263 deals valued at $294 billion are expected to be completed by June 30, 2021, with domestic IPOs accounting for 77 per cent of all listings during this time.

Commenting on the lack of cross-border IPOs as a form of capital raising in Africa, the Head of Africa at Baker McKenzie, Mr Wildu du Plessis, explained that, “Issuers and investors in Africa are waiting for economic and legal certainty and effective regulation to be implemented, combined with the need for deeper liquidity before they go ahead with capital raising in the continent.

“It is also worth noting that the region tends to lag the global pattern by a few cycles, so we could see a similar rising demand for African IPOs in future years, possibly boosted by the launch of the African Continental Free Trade Area at the beginning of this year.”

Regarding the SPAC listing by African Gold Acquisition Corporation, Mr Du Plessis explained that SPACs are formed to raise capital through IPOs, with the capital raised then used to acquire existing companies (or invest in existing businesses) the identities of which are not disclosed or even known at the time of the IPO.

Even though some indication is given at the time of the IPO as to which industries will be targeted, investors in these SPACs are essentially asked to invest in a somewhat uncertain future.

The African Gold Acquisition Corporation has noted it could potentially target any industry, but it will mainly focus on target companies with operations in the gold mining sector.

African investors and issuers with interests in the mining sector in Africa will be watching this SPAC closely, with the possibility that this could ignite a growing trend for this type of capital raising in Africa down the line.

Mr Du Plessis explained that while cross-border IPOs are currently not used as a way to raise capital on the continent, the next few years could possibly see increased capital raising activity for companies in industries particularly hard hit during COVID-19, including hospitality and transportation.

The technology sector is also expected to dovetail into life sciences, and this could result in a move towards capital raising via IPOs for technology companies with operations in Africa. New and innovative technologies (particularly among biotech, fintech, edtech, software AI and health tech) continue to emerge at an unprecedented pace, expedited by COVID-19 and the need to digitally innovate business operations to survive in a virtual environment could boost regional capital raising transactions.

“Further, no matter where businesses are in the world or what industry they operate in, Environmental Social and Governance (ESG) has become one of the hottest topics for businesses, their boards, their customers and their employees.

“While in previous years, some viewed the inclusion of ESG elements to be at the expense of returns and efficiency, among other things, this has rightly shifted to viewing ESG strategy as a prerequisite to business success. ESG is fast becoming an essential element for successful transactions in Africa,” Mr Du Plessis said.

Top exchanges

The Nasdaq and the NYSE were the top exchange destinations in H1 2021, raising over $160 billion across 519 IPOs. Over 80 per cent of IPO issuers were US-based.

Continued growth in Mainland China domestic listings bolstered the performance of the Shenzhen and Shanghai exchanges. Other strong performers included the ASX, TSX (mainboard, TSXV and NEX Board), Japan Exchange Group, KRX and HKEx (mainboard and GEM).

Euronext Amsterdam was boosted by two cross-border megadeals, worth over USD 1 billion each, bringing capital raising for Euronext to over USD 4 billion for the first time since 2018.

Top industries

The financial sector led in terms of value (USD 124 billion raised) and volume (455 deals), most notably due to the number of SPAC IPOs, with over 350 SPACs going public to raise $103 billion. Technology and Healthcare came in second and third in the rankings for both value and volume, as the COVID-19 pandemic helped to drive investments into these sectors, particularly in China.

Other Trends

In addition to the rise in SPACs in the US, other regions may also be moving to attract SPAC activity. In London, Lord Hill’s review of the UK’s listing regime was published in an effort to help the LSE gain a more competitive edge against other exchanges post-Brexit.

One recommendation is to remove the automatic suspension of SPACs. Euronext, Hong Kong and Singapore are also exploring SPACs due to investor demand.

In the US, headwinds are building for SPACs. The US capital markets landscape is expected to shift in the coming months, due to the new US administration and SEC chair.

Various regulatory and disclosure changes are considered likely, including an increased focus on ESG reporting requirements (including DEI disclosures), closer scrutiny of SPACs and more enforcement proceedings by the SEC.

Economy

Aradel Holdings Acquires Equity Stake in Chappal Energies

Published

51 minutes ago

11/12/2024

Aduragbemi Omiyale

By Aduragbemi Omiyale

A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.

This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).

Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.

Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.

As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).

The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.

In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.

The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.

“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.

“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.

“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.

“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.

Economy

Afriland Properties Lifts NASD OTC Securities Exchange by 0.04%

Published

5 hours ago

11/12/2024

Adedapo Adesanya

By Adedapo Adesanya

Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.

As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.

But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.

The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.

During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.

However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.

Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.

Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.

Economy

Naira Trades N1,542/$1 as FX Speculators Dump Dollars in Panic

Published

5 hours ago

11/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The Naira continued to appreciate on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), gaining 0.7 per cent or N10.23 on Tuesday, December 10 to trade at N1,542.27/$1 compared with the preceding day’s N1,552.50/$1.

The Central Bank of Nigeria (CBN)-backed Electronic Foreign Exchange Matching System (EFEMS) platform introduced to tackle speculation and improve transparency in Nigeria’s FX market has been attributed as the source of the Naira’s appreciation.

Speculators holding foreign currencies, particularly the US Dollar, have seen the value of their money drastically drop due to the appreciation of the local currency. This is forcing them to dump greenback into the system and take the domestic currency alternative- a move that has seen available FX increase.

Equally, the domestic currency improved its value against the Pound Sterling in the official market during the trading day by N6.81 to sell for N1,955.12/£1 compared with Monday’s closing price of N1,961.93/£1 and against the Euro, it gained N10.84 to close at N1,613.00/€1, in contrast to the previous day’s rate of N1,623.84/€1.

Data from the FMDQ Securities Exchange showed that the value of forex transactions significantly increased yesterday by $228.85 million or 257.2 per cent to $401.17 million from the preceding session’s $112.32 million.

However, in the parallel market, the Nigerian currency weakened against the US Dollar on Tuesday by N5 to settle at N1,625/$1 compared with the previous day’s value of N1,620/$1.

In the cryptocurrency market, Dogecoin (DOGE) lost 4.8 per cent to sell at $0.39116, Litecoin (LTC) depreciated by 3.3 per cent to trade at $110.25, Binance Coin (BNB) went south by 2.3 per cent to $681.44, Ethereum (ETH) dropped 1.6 per cent to finish at $3,671.08, and Cardano (ADA) slid by 0.5 per cent to $0.8837

Conversely, Ripple (XRP) jumped by 5.4 per cent to $2.23 amid a continued shift for the coin with its parent company seeing the benefits of a crypto-friendly regulatory environment for US-based companies.

XRP is closely related to Ripple Labs, a high-profile payments company targeted by the SEC in 2020 on allegations of selling the token as a security to U.S. investors. Ripple fully cleared a long-drawn court case in 2024.

Further, Solana (SOL) expanded by 0.8 per cent to $219.75, Bitcoin (BTC) grew by 0.4 per cent to $97,446.95, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.