Table of Contents
- Trends in African capital markets in 2015
- Trends in global equity markets from 2006 to 2015
- African equity markets
- African IPO market
- African FO market
- African IPOs and FOs: Analysis of cross-border activity from 2011 to 2015
- African debt markets
- African high-yield debt market
- African investment-grade debt market
Read the full report below.
PwC’s 2015 Africa Capital Markets Watch provides an analysis of African equity and debt capital markets transactions that took place between 2011 – 2015. It also highlights the trends in African capital markets in 2015 which reflected strong figures. However, the report indicates that challenging times may lie ahead.
The publication focuses on the following two main areas:
- Equity capital markets transactions included in the analysis comprise capital raising activities, whether initial public offerings or further offers, by African companies on exchanges worldwide, as well as those made by non-African companies on African exchanges.
- Debt capital markets transactions analysed include debt funding raised by African companies and public institutions.
Equity capital markets (ECM) transactions included in the report comprise capital raising activities, whether IPOs or FOs, by African companies on exchanges worldwide or those made by non-African companies on African exchanges. Debt capital markets (DCM) transactions analysed include debt funding raised by African companies and public institutions, whether high-yield (HY) or investment-grade (IG) debt.
Between 2011 and 2015, African ECM activity consisted of 105 IPOs and 336 FOs, with 2015 accounting for the largest number of IPOs and FOs in the period with 28 and 91, respectively.
African DCM activity on African exchanges was comparatively muted in 2015, with a decline from 2012 and 2013, years which saw a peak in terms of volume and value of debt capital raised, respectively.
On 31 December 2015, African exchanges had a market capitalisation of approximately $1 trillion, with 23% of this value residing on exchanges outside of South Africa. Though statistics cannot be interpreted in isolation, certain metrics commonly used to analyse global market performance, such as the market capitalisation-to-GDP ratio, suggest that untapped value remains in Africa, with the potential for further sustained growth in African market capitalisation.
Growth across the continent, the outlook for which varies based on the diverse and specific cultural, economic and political circumstances of each country, will require continued investment in various sectors including infrastructure, agriculture, consumer products, telecommunications and financial services, alongside the other industries more traditionally associated with Africa.
Recommended: African Markets Guide 2015: Barclays (Report)
In 2015, the capital markets, both local and international, continued to feature as a primary funding source for this growth, in conjunction with private equity investment and mergers & acquisitions (M&A), reflecting the continued appetite from investors with key portfolio allocations targeted towards emerging and frontier markets. Though this upward trend in activity has now been observed over the trailing five-year period, we recognise that uncertainties in the market and economic trends may see a more challenging 2016.
Accessing local or international capital markets, especially for first time issuers, involves a steep learning curve with complex regulations and considerations for many areas of the business. When contemplating a move towards the capital markets, companies can begin to prepare by conducting a thorough readiness assessment – from clarification of the market proposition to financial reporting readiness and internal controls, to tax planning and governance matters – to ensure a successfully planned, monitored and executed transaction. Companies may also find that independent capital markets advice can help in navigating the maze of complexities when looking to raise capital.