Economy
Drop in Domestic Listings Shrinks Capital Raising in H1 2019
A latest Cross-Border IPO Index by Baker McKenzie for the first half of 2019 has revealed that capital raised by African issuers declined by 28 percent year on year to $341 million compared with $472 million in the same period on 2018.
The report, which reached this conclusion based on data sourced from Refinitiv, attributed the decline to the 80 percent drop in domestic capital raising in Africa, standing at only $85 million from four IPOs, compared with $419 million from the same number of IPOs in H1 2018.
According to the Index, the largest IPO to come out of the region so far in 2019 is Carbon Holdings Ltd, which is expected to raise as much as $250 million in London and Egypt sometime in June.
Egypt is generating buzz around its pipeline of IPOs with some speculating this could be the busiest year for listings in Cairo since the uprising in 2011.
Growing confidence in economic policies introduced since the currency float has boosted the EGX and is prompting companies to consider share sales. One large pipeline IPO is expected from Banque du Caire SAE in Q3 2019.
In a statement obtained by Business Post, the Head of Capital Markets at Baker McKenzie in Johannesburg, Mr Wildu du Plessis, stated that, “The drop in African IPO values in H12019 was mostly because of political and economic uncertainty on the continent.
“Investors wanting to raise capital in Africa are thinking twice and waiting for political and economic stability to return before going ahead.
“Also eroding investor confidence in Africa are the escalating global trade tensions, which have culminated in, for example, the so-called United States (US) China trade wars and the possibility of a “no deal Brexit” – both have the potential to impact African economies significantly.”
“In South Africa, capital raising has decreased substantially in recent years, also due to economic and political uncertainty. Political stability will hopefully begin to return now that country’s elections are over, but there is still a lot of work to do to stabilise the economy.
“The World Bank recently downgraded South Africa’s growth rates and I think there is at least another year of hard work before the economy starts to recuperate and capital markets in South Africa recover,” Mr Du Plessis added.
“However, there is good news in other jurisdictions in Africa. In addition to the healthy pipeline of IPOs in Egypt, there are also signs of life returning to Nigeria’s capital markets.
“Political instability was also to blame for a big collapse in capital raising in Nigeria in recent years, but the country looks to be recovering and, according to Baker McKenzie’s recent Global Transactions Forecast, there is a predicted return of IPOs in Nigeria in the next three years.
“A case in point, Airtel Africa announced recently that it is seeking to raise as much as $750 million in London and Nigeria, but the company has yet to release more information about when it plans to go public this year.
“Hopefully this is the start of a long upswing in capital raising activity in the country,” says Mr Du Plessis.
The top cross-border IPOs by African issuers were South African company Renergen Limited’s listing in Australia, which raised $7 million; and Egyptian company Carbon Holding’s pipeline dual listing in London and Egypt, which is expected to raise $250 million.
Both of these cross-border IPOs are in the energy and power sector. In terms of domestic IPOs, technology company BMIT Technologies PLC raised $55 million when it listed in Malta, real estate company ICON Properties PLC’s listing in Malawi raised $20 million, industrial company Skyway Aviation Handling Co raised $6 million when it listed in Nigeria and healthcare company Speed Medical SAE raised $3 million in a domestic IPO in Egypt.
A major deal that is excluded from African figures is Jumia Technologies’ debut on the NYSE, which raised $225 million in April. Jumia is a pan-African e-commerce start-up but its parent company, Jumia Group, is incorporated in Germany, so it is not included in the Africa report.
On the global scene, Baker McKenzie said capital raising in global IPO markets fell by 37 percent, with volume dipping 34 percent in the first half of the year compared to the same period in 2018.
A total of $69.8 billion was raised across 514 IPOs, which is the lowest for value and volume since 2016. The US Federal government shutdown, continuing trade tensions between the US and Beijing, the ongoing Brexit saga and the decline of mega IPOs all contributed to a slower market performance.
With fewer IPOs in the market, competition amongst exchanges is growing, as some listing locations make strategic changes to entice public offerings. The introduction of China’s Science and Technology Innovation Board looks set to shake up the market and challenge New York and Hong Kong for tech listings.
Baker McKenzie’s Head of Global Capital Markets, Koen Vanhaerents, said, “The global IPO market experienced quite a slow start to the year as significant political issues stifled activity, along with a change in investor sentiment towards risk – particularly among pre-revenue companies. While global activity experienced sharp declines, this is perhaps skewed slightly when compared to the stellar performance seen in the same period in 2018.
“With a strong pipeline, H2 2019 looks set to deliver a much more prosperous performance overall.”
EMEA outlook
The EMEA IPO market struggled during the first six months of 2019 due to uncertainties surrounding the UK’s exit from the European Union. Overall capital raised fell by 67 percent compared to the same period in 2018 to $9.2 billion while the number of IPOs fell by 61 percent to 47.
Cross-border activity was even more profoundly impacted with only three listings in EMEA and only one of those on the London Stock Exchange. Domestic activity levels helped the London Stock Exchange to retain the top spot for overall capital raising at $2.7 billion from 12 listings. Seven of these listings were from the financial sector and raised almost $2 billion, the largest of which was Network International’s $1.4 billion IPO.
Second to London was Borsa Italiana with $2.3 billion from seven listings, boosted by the $2.2 billion Nexi SpA listing. SIX Swiss exchange pulled in $1.9 billion from two IPOs, with Stadler Rail’s debut accounting for $1.3 billion of that.
The statement said despite its sluggish performance, EMEA is proving to be the region of choice for FinTech listings, particularly in the payments field, as the age of digitization and cashless transactions continues to explode, fuelling the need for innovation and technological growth. FinTech listings accounted for more than a third of capital raised and the largest listing was Nexi SpA’s IPO.
According to the Head of EMEA Capital Markets at Baker McKenzie’s, Mr Adam Farlow, “Europe’s market and economy continues to struggle under the weight of political volatility and a lack of clarity around Brexit, but all eyes look to October for more transparency and direction.
“We are hopeful that the market will subsequently settle and activity in London will recover. The demand is still there for access to the liquidity and exposure that comes with the London Stock Exchange.”
By Adedapo Adesanya
The National Pension Commission (PenCom) has defended its decision to allow Pension Fund Administrators (PFAs) to invest in the parent companies of their custodians, insisting that adequate safeguards are in place to protect contributors’ funds.
The director-general of the pension regulator, Ms Omolola Oloworaran, speaking on Tuesday during the Meet the Press Briefing at the Presidential Villa, Abuja, said the commission’s decision to relax the investment restriction followed a comprehensive risk assessment that found minimal conflict of interest.
She explained that under PenCom’s investment regulations, PFAs are only permitted to invest pension assets in carefully selected instruments that meet stringent criteria, including profitability, strong credit ratings and proven track records.
According to her, the commission regularly reviews its investment regulations, conducts routine examinations and spot checks on PFAs to ensure strict compliance with established risk management guidelines.
“PFAs cannot just go into the stock market and buy any kind of stock. There are strict guidelines. Companies must demonstrate profitability, have a proven track record and satisfy other criteria before pension funds can invest,” she said.
Ms Oloworaran noted that each PFA also operates under the oversight of a board, an investment committee and a risk management committee, providing additional layers of governance to safeguard contributors’ funds.
She said PenCom recently issued a circular allowing PFAs to invest in the parent companies of their custodians after determining that the potential conflict of interest was negligible.
The PenCom boss explained that the parent companies involved are largely Tier-1 banks, including First Bank, United Bank for Africa (UBA) and Zenith Bank, which she described as A-rated institutions with strong financial foundations.
She said the policy was intended to widen investment opportunities for pension funds without compromising safety.
Using Stanbic IBTC as an example, Ms Oloworaran explained that if its custodian is Zenith Bank, the previous restriction prevented the pension administrator from investing in Zenith Bank shares despite the bank’s strong performance.
“We reviewed the risks and any potential conflict of interest and found the risks to be very low. That is why we opened that investment window,” she said.
By Aduragbemi Omiyale
Analysts at Meristem Research have predicted that the inflation rate for June 2026 in Nigeria should marginally rise to 15.95 per cent on a year-on-year basis from the 15.93 per cent reported in May 2026.
The National Bureau of Statistics (NBS) is expected to release inflation numbers for last month later today, Wednesday, July 15, 2026.
In its report sighted by Business Post, Meristem Research said it expects inflationary pressures to re-emerge across key economies in the near term, as the re-escalation of the US-Iran conflict has reignited upward pressure on global oil prices.
It disclosed that this marks a sharp reversal from most of June, when the ceasefire between the two countries helped drive oil prices lower, raising expectations of some relief on the inflation front.
With conflicts now flaring up again, oil prices are likely to increase again, and the anticipated easing in energy-driven inflation may not materialise as broadly as earlier envisaged.
“Nonetheless, some relief is likely from the food segment, where robust supply conditions across major producing regions and softening demand should continue to ease food price pressures,” it stated.
The team also explained that it projected a 15.95 per cent inflation rate because of the lingering effects of persistent food price pressures.
“However, we expect core inflation to moderate as the sharp reversal in energy prices begins to filter through to transportation, distribution, and other energy-related costs, easing underlying price pressures.
“On a month-on-month basis, the combined effect of lower petrol prices, a relatively stable Naira, and the gradual pass-through of reduced energy costs across the supply chain should exert further downward pressure on inflation.
“Based on our assessment, food inflation is expected to remain the key swing factor, as seasonal pre-harvest supply constraints are likely to offset some of the gains from lower logistics costs,” it said.
By Adedapo Adesanya
The duo of Central Securities Clearing System (CSCS) Plc and Afriland Properties Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.61 per cent on Tuesday, July 14.
CSCS Plc saw its stock value drop N9.08 to close at N82.40 per share compared with the preceding session’s N91.48 per share, and Afriland Properties Plc slid by 17 Kobo to sell at N15.00 per unit versus N15.70 per unit.
The losses recorded by the two securities pulled back the market capitalisation by N41.64 billion to N2.546 trillion from N2.587 trillion, and cracked the NASD Security Index (NSI) by 69.36 points to 4,242.31 points from 4,311.67 points.
It was observed that the exchange witnessed two price advancers during the session, led by FrieslandCampina Wamco Nigeria Plc, which gained N1.37 to end at N151.37 per share compared with the previous day’s N150.00 per share, and Food Concepts Plc chalked up 5 Kobo to settle at N2.50 per unit versus N2.45 per unit.
The volume of securities traded by market participants surged by 50.7 per cent to 13.7 million units from the previous 9.1 million units, while the value of securities went down by 79.7 per cent to N65.2 million from N320.4 million, and the number of deals crashed by 3.6 per cent to 27 deals from the previous session’s 28 deals.
At the close of transactions, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with the sale of 3.4 billion units for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc, which exchanged 2.3 billion units valued at N6.5 billion, and CSCS Plc with 73.9 million units transacted for N5.2 billion.
GNI Plc also closed the trading day as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
