Why Africa now?
Seven out of the 10 fastest growing economies in the world in the next three years are in Africa (Source: IMF, The Economist).
Large Consumer Market
200 million Africans with significant discretionary spending power (GDP per capita >US$5k) by 2020, larger than in India (Source: McKinsey).
New Green Revolution
60% of the world’s available arable land, competitive labour cost, yet no significant improvement in agricultural yields for the past 60 years (Source: Syngenta Foundation).
Increased infrastructure investment driven by increased resources activity and rapid urbanization.
Half of the continent’s 1 billion population is of working age (15 – 64 years old)and average GDP growth now exceeds population growth.
Why focus on African IPO’s?
Based on a fundamental undersupply of investible scrip and a growing pool of institutional investors, IPO’s on African stock exchanges have become a recognized way for portfolio companies to raise capital, whilst providing PE investors with an attractive exit route.
Two thirds of African countries have stock exchanges. Between 2007 and 2014, US$17.3bn was raised on 20 African exchanges, via 207 new issues. Half of those IPOs attributed to mid-sized companies with annual revenues of less than US$50m.
A majority of the IPO issuers achieved favorable pricing metrics compared to private transactions in Africa.
Most African IPOs between 2007 and 2014 were over-subscribed, mainly due to a persisting imbalance between supply and demand for new listed assets among local retail and institutional investors.