African Companies Defied Headwinds to Raise $13.5 Billion Equity

Ghana Stock Exchange

April 26, 2018//-Despite difficult business environment, African companies have defied the odds to continue its upward growth trajectory raising about $13.5 billion equity in non-African capital markets in 2017, representing a 49 per cent increase from 2016, PwC 2017 report has said.

The report also noted that $7.5 billion in non-local currency debt was raised by African companies in international debt capital markets, a 68 per cent increase from 2016.

“Despite a challenging environment, with public debt approaching critical levels in some countries and concerns over excessive reliance on oil, African businesses are expanding,” the report noted.

The report, which is a PwC’s analysis of 75 companies featured in the inaugural ‘Companies to Inspire Africa 2017’ report by the London Stock Exchange Group (LSEG) in partnership with Africa Development Bank Group, CDC Group and PwC, provides clear evidence of significant investment and growth in African business.

Commenting on the report, Simon Venables, Deal origination leader, PwC Africa, said the success of these businesses tells an important story to the world: there is huge potential in Africa.

“Companies are growing but they need external interest and investment for this to continue. While supportive governments, enabling environments and access to funding clearly play significant roles, business transparency and accountability are also essential ingredients to attract a wider audience and fuel the growth of African companies.”

Andrei Ugarov, Corporate finance partner, PwC Nigeria, noted that for UK investors, Africa offers economic growth that continues to outpace established nations.

“A swelling middle class, advances in technology and the rise of entrepreneurship has boosted the number of consumers, making the continent more appealing than ever.”

The report explained that a number of the businesses featured in Companies to Inspire Africa 2017 have taken a lead in obtaining alternative sources of financing beyond traditional bank debt.

“Examples include issuing the first 10-year infrastructure corporate bond in Nigeria, raising finances through cooperative and social investment companies and numerous stock exchange listings including a record $600 million Eurobond.

“Companies from Kenya, Nigeria and South Africa are leading the way in spreading their African footprint beyond their borders. Financial services, consumer services and energy are the sectors where the most expansion took place.

Twenty-one companies featured in LSEG’s Companies to Inspire Africa 2017 report formed alliances and joint ventures in the past year. These include companies based in Kenya, Nigeria and South Africa, with industrial products and telecoms and technology being the dominant sectors.

Mergers and acquisitions continue to be a critical aid for growth. Of the 75 businesses analysed, 16 concluded M&A deals from a wide range of sectors including consumer services, financial services, healthcare and pharma, industrials, renewables, technology and transportation.

Nikhil Rathi, CEO, London Stock Exchange plc and Head of International Development, London Stock Exchange Group, said high-growth SMEs is the engine for growth in Africa’s economies, innovating and creating jobs.

“Many of the businesses identified in ‘Companies to Inspire Africa’ have successfully secured capital to finance their continued success and growth, through equity and bond issuances, and establishing new global partnerships. It is exciting to see the progress of so many firms outlined in this subsequent report, and we warmly congratulate them on their outstanding performance”, according to the report.

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