2015 Africa Capital Markets Watch

2015 Africa Capital
Markets Watch
28
IPOs in 2015
105 IPOs between 2011 and 2015
$12.7bn
IPO and FO proceeds raised in
2015
$41.3bn proceeds raised between
2011 and 2015
47
Corporate and sovereign/
supranational debt issuances in
2015
489 issuances between 2011 and
2015
$19.3bn
Corporate and sovereign/
supranational debt capital raised
in 2015
$110.2bn raised between 2011
and 2015
January 2016
www.pwc.co.za/capitalmarketswatch.html
Tunisia
Overview of African stock exchanges at
31 December 2015
o
cc
o
or
M
Libya
Algeria
Egypt
Sudan
m
al
ia
So
Nigeria
Cameroon
Ghana
Cape Verde
da
an
Rwanda
Ug
Kenya
Other active exchanges (no
data available)
Inactive/No exchange
BRVM members *
BVMAC members **
am
oz
Zimbabwe
Namibia
M
$30 - $100bn market cap
$6 - $30bn market cap
$1-$6bn market cap
ue
Zambia
> $100bn market cap
Seychelles
biq
Legend :
Malawi
Tanzania
Mauritius
Botswana
South Africa
* Bourse Régionale des Valeurs Mobilières:
Benin, Burkina Faso, Côte d’Ivoire, GuineaBissau, Mali, Niger, Senegal and Togo
** Bourse des Valeurs Mobilières de l’Afrique
Centrale:Central African Republic, Chad,
Equatorial Guinea, Gabon, and Republic of
Congo.
Swaziland
Sources: World Federation of Exchanges, Thomson Reuters
About 2015 Africa Capital Markets Watch
This report surveys all new primary market equity initial public offerings (IPOs) and further offers (FOs) by listed companies, as well as high-yield
(HY) and investment-grade (IG) debt capital markets activity, in which capital was raised on Africa’s principal stock markets and market segments
(including exchanges in Algeria, Botswana, Cameroon, Cape Verde, Côte d’Ivoire, Egypt, Libya, Gabon, Ghana, Kenya, Malawi, Mauritius,
Mozambique, Namibia, Nigeria, Morocco, Rwanda, Seychelles, Somalia, South Africa, Sudan, Swaziland, Tanzania, Tunisia, Uganda, Zambia and
Zimbabwe).
The report also includes IPO, FO, HY and IG activity of African companies* on international exchanges or non-African companies on African
exchanges, on an annual basis. Movements between markets on the same exchange are excluded.
This report covers activity up to 31 December 2015 and captures deals based on their pricing date. All market data is sourced from Dealogic,
Bloomberg, The World Federation of Exchanges, Thomson Reuters and the stock markets themselves, unless otherwise stated, and has not been
independently verified by PwC.
*
Companies incorporated in Africa or with primarily African operations or an African parent.
Contents
Contents
Foreword4
Trends in African capital markets in 20155
Trends in global equity markets 2006 – 20157
African equity markets9
African IPO market
10
African FO Market
17
African IPOs and FOs: Analysis of cross-border activity
2011 – 2015
21
African debt markets23
African high-yield debt market 25
African investment-grade debt market
30
Contacts
33
Acknowledgements 33
Foreword
Welcome to PwC’s 2015 Africa Capital Markets Watch. In our second annual
publication, we have expanded the scope of our IPO Watch Africa to include an
analysis of African equity and debt capital markets transactions that occurred over
the past five-year period (2011-2015).
Equity capital markets (ECM)
transactions included in our 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.
At 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.
4 | 2015 Africa Capital Markets Watch
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.
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.
We hope you find the insights of our
expanded capital markets analysis to
be both interesting and useful.
Nicholas Ganz
Clifford Tompsett
PwC Africa Capital Markets Group Leader
PwC Global IPO Centre Leader
Trends in African capital markets in 2015
Africa remains resilient
amidst lower growth
expectations
The decline in commodity prices,
particularly the oil price; concerns
about levels of demand from China, a
major trading partner for many African
countries; and the relative weakening
of local currencies resulted in slower
growth projections across a number of
economies in 2015. However, Africa
continues to have more than just one
story, with certain countries expected
to continue on a stronger growth
trajectory in 2016.
In terms of the continent’s largest
economy, Nigeria, PwC’s January 2016
Global Economy Watch suggests growth
will rebound to almost 5% in 2016 as
tight fuel supplies and power outages
abate and a more accommodative
monetary and fiscal stance takes hold.
Renewed focus on tackling corruption
should also help to increase inflows
of foreign direct investment (FDI),
supported by improved security and
better governance.
South Africa, the continent’s most
advanced economy, experienced
its own challenges at the year end,
brought on by surprise political
manoeuvres, which have shaken local
and global investor confidence, at
least for the moment. Nevertheless,
the Johannesburg Stock Exchange
(JSE) ended the year up nearly 2%,
potentially reflecting the depth of
liquidity in the market to absorb
negative events and the prevalence of
traded shares that act as a hedge to
South African rand returns.
Active equity markets
Equity issuances by African companies
continued to show strong activity
in 2015, hitting five-year highs in
both volume and value. Industry
subsectors such as real estate and
food and beverage showed a robust
performance in the year, continuing
to reflect the megatrends affecting the
African continent.
While persistent, record-breaking
activity in 2016 is less certain, some
significant listings – both primary
and secondary – have already been
announced, and ECM activity is
expected to reflect the continued
desire of local companies seeking
financing to grow into regional players,
as well as private equity investors
seeking to capture return through an
IPO exit.
Technical advances,
strengthened regulation
and harmonisation
have improved size and
liquidity of markets
There is an indication that some
activity may currently be impeded
by outdated trading, clearing and
settlement systems, improvements to
which are now on the agenda for many
exchanges to handle sizeable capital
inflows. This improved efficiency
will lower barriers and enhance the
attractiveness of African stock markets
for equity investors.
During 2015, for instance, the
Zimbabwe Stock Exchange
transitioned from a manual trading
platform to an automated trading
platform and has already attracted a
new listing in 2016.
In addition, evolution in local
regulation has provided the
opportunity for pension funds to
diversify their expanding portfolios
beyond equity investments in
traditional sectors, such as banking
and oil & gas.
Harmonisation of East African
exchanges and structured
collaboration between exchanges
(such as the London and Nigerian
Stock Exchanges), among others,
have allowed these markets to become
more liquid and active and to improve
turnover ratios.
PwC | 5
Sovereign bonds
dominate debt markets
End to the record low
interest rate environment
As in each year over the period
analysed, sovereign bonds dominated
debt markets, accounting for 47%
and 44% of the total bond market
measured by value in 2015 and over
the five-year period, respectively.
Record low interest rates globally
created an issuer-friendly debt market
over the past five years with sovereign
issuances leading the field. However,
the increase in interest rates following
the end of the US Federal Reserve’s
quantitative easing programme has
distinctly cooled bond markets.
As an alternative to high debt servicing
costs for local currency debt, African
countries have specifically tapped
international debt markets over the
past years to obtain funding of less
costly foreign currency.
However, the development of
sovereign yield curves as a means
of formally quantifying country risk
for these issuances has also driven
foreign participation in and pricing
of corporate instruments in these
countries.
Although the market for corporate
bonds remains small and most popular
in the financial services and oil & gas
sectors, a shift to other sectors may be
emerging. In March 2015, for example,
East African Breweries became the
first non-banking corporate in East
Africa to issue a bond in international
markets.
6 | 2015 Africa Capital Markets Watch
Furthermore, weakening of local
currencies relative to the US dollar and
other major funding currencies has
made risk management and repayment
of these foreign currency denominated
bonds more expensive, suggesting that
this method of funding may be less
attractive during 2016.
Trends in global equity markets 2006 – 2015
Globally, the number of IPOs in 2015
remained fairly stable as compared
to 2014, whereas the total amount of
money raised through IPOs decreased
by 26%. IPO trends in Africa were
more positive in 2015 than globally,
though African FOs were more aligned
to global trends.
Global money raised via IPOs and FOs
The1: number
ofraised
IPOs
2015
remained
Figure
Global money
viain
IPOs
and FOs,
2006 – 2015fairly stable as compared to 2014 whereas the
total amount of money raised through IPOs decreased by 26%
FO money raised & # of deals
IPO money raised & # of deals
Global money raised via IPOs and FOs (10-year overview)
1,621
1,885
US, 19%
1,248
$371.2bn
567
$295.8bn
497
1,036
$295.8bn
$105.7bn
3,001
2007
2008
3,677
1,965
$569.4bn
$120.3bn
2009
2010
3,550
3,546
2007
2,894
$470.7bn
2009
2010
858
1,144
Other,
39%
2011
China,
13%
$200.7bn
$194.6bn
$140.6bn
2012
2,506
$641.2bn
$557.3bn
2008
2011
$841.6bn
$429.1bn
2006
719
1,154
$272.5bn
$178.3bn
2006
Top countries 2015
$509.3bn
2012
2013
2014
2015
3,038
3,170
3,281
$586.4bn
2013
$612.8bn
2014
$681.7bn
2015
Japan,
8%
Other,
34%
Australia,
5%
UK, 8%
UK, 10%
Hong
Kong, 11%
US, 31%
China,
Hong Kong, 12%
10%
Note: included deals > $5m, excluding PIPO’s and transactions on Over-The-Counter exchanges. Top countries have been selected based on money raised in 2015. If IPOs or FOs take place in two or
more countries, total money raised is attributed to all countries
Source: Dealogic, PwC’s Q4 2015 Equity Capital Markets Briefing
Quarterly ECM Briefing
PwC
Source: Dealogic as of 31 December 2015
Q4 2015
2
PwC | 7
Global indices 2013 – 2015
Since the beginning of 2013,
performance of the FTSE/JSE Africa
All Share Index* has tracked a similar
course to the FTSE 100 and S&P 500,
while the S&P All-Africa Index**
tracked the Hang Seng more closely
until market gloom began to push it
lower in 2015, together with the drop of
African currencies against the US dollar.
All indices presented in figure 2 share a
clear increase in volatility throughout
the course of the past year.
Figure 2: Global indices, 2013 - 2015
150
120
Hang Seng
FTSE/JSE Africa
All share index*
S&P All Africa**
1 Jul 2015
1 Jan 2015
S&P 500
31 Dec 2015
FTSE 100
1 Jul 2014
1 Jul 2013
1 Jan 2013
60
1 Jan 2014
90
* The FTSE/JSE Africa All Share Index is a market capitalisation-weighted index and reflects South African rand values. Companies included in
this index comprise the top 99% of the total pre free-float market capitalisation of all listed companies on the JSE.
** The S&P All Africa Index is designed to serve as a comprehensive benchmark for the African market, covering companies listed on exchanges
in 13 countries – Botswana, Côte d’Ivoire, Egypt, Ghana, Kenya, Mauritius, Morocco, Namibia, Nigeria, South Africa, Tunisia, Zambia and
Zimbabwe – as well as companies listed in developed markets that derive the majority of their revenue from the African continent. The index is
weighted by float-adjusted market capitalisation and reflects in US dollar values.
Source: Bloomberg
8 | 2015 Africa Capital Markets Watch
African equity markets
In line with global trends, 2015 was a
challenging year for the African equity
markets, with the return of market
volatility and emergence of renewed
global economic uncertainties, some of
which have been closely linked to the
‘Africa Rising’ narrative.
While many economies have faced
challenges in traditional sectors, a
number have responded by shifting
focus and strategy to more stable
sectors, as illustrated in our ECM
industry sector analysis. African
ECM activity in 2015 was driven
by continued capital growth in the
financials sector (including closed-end
funds and real estate).
Other non-commodity sectors,
such as renewable energy, real
estate, infrastructure, construction,
agriculture, health care and consumer
goods, have also become more
significant to the growth of African
economies.
We continue to analyse trends both
on an annual basis, as well as over a
five-year time frame, as an indication
of broader trends.
Over the past five years, there have
been 441 African ECM transactions
raising a total of $41.3bn.
The African IPO market also hit a fiveyear peak in 2015, with a record 28
listings.
2015 showed a steady overall increase
in ECM activity of 18% in terms of
transaction volume and 14% in terms
of transaction value as compared
to 2014. However, 72% of 2015 IPO
value and 54% of IPO volume were
transacted during the first half of
the year, reflective of the relatively
higher levels of consumer confidence
compared to the second half of 2015.
Proceeds from ECM activity are
displayed in US dollars and the 2015
increase shown in figure 3 is tempered
by the decreasing US dollar value
of proceeds raised in South African
rand and other currencies, such as
the Egyptian pound. We estimate
that on a constant currency basis, the
2015 increase in US dollar-equivalent
proceeds would have increased over
the prior year by 28% for IPOs and by
36% for FOs.
Figure 3: ECM activity, 2011 – 2015
119
15 000
120
101
10 712
12 000
83
9 478
80
73
$million
9 000
65
60
6 000
4 475
5 455
5 102
40
3 000
0
20
1 101
401
891
1 701
1 991
2011
2012
2013
2014
2015
Value FOs ($m)
Note:
100
Value IPOs ($m)
0
Number of ECM
transactions
Data presented in our IPO Watch Africa 2014 report has been adjusted for an additional 2014 IPO (Total Senegal) of $6.6m and two
additional 2014 FOs (Curro Holdings of $55m and Taste Holdings of $16m), which were added to the Dealogic dataset after publication.
In addition, our methodology for this report has been amended to include outbound capital markets activity in the data for ECM and DCM
analyses. Prior periods have been amended to reflect this change in methodology.
Source: Dealogic
PwC | 9
African IPO market
African IPO trends
2011– 2015
Figure 4: IPO trends, 2011 – 2015
2 000
Over the past five years, there have
been 105 IPOs by African companies
on both African and international
exchanges and non-African companies
in African exchanges, raising $6.1bn.
There has been an overall increase of
12% in terms of the number of IPOs
and 17% in terms of capital raised.
During 2015, the top four IPOs by
proceeds involved companies or
exchanges in North Africa. Each of
these listings was oversubscribed,
suggesting healthy investor demand in
the region in the first half of 2015.
10 | 2015 Africa Capital Markets Watch
25
22
1 500
1 000
1 101
30
1 991
25
1 701
20
17
$million
Despite the volatility in global equity
markets, companies continue to
be attracted to African markets, as
demonstrated by the steady growth in
first-time listings as compared to 2014.
28
15
13
891
10
500
401
0
2011
Value ($m)
Source: Dealogic
2012
5
2013
Number of IPOs
2014
2015
0
African IPO data by exchange 2011 – 2015
In 2015, capital raised from IPOs by
companies on the JSE in US dollar
terms decreased by 11% as compared
to 2014, largely impacted by the
weakening of the South African rand
during the year; the rand value of IPO
capital raised increased 11% over 2014
levels. Capital raised from IPOs by
companies on other African exchanges
increased slightly by 3% as compared
to 2014. In terms of volume, the JSE
saw a 33% increase in the number
of IPOs as compared to 2014. 2015
was also a good year for the JSE’s
Alternative Exchange (AltX), with an
increase in listings value of more than
double the previous year.
2015 saw a six-fold increase in the
value of IPO activity on the Egyptian
Exchange, though the bulk of these
listings occurred during the first half
of the year, against a backdrop of 5%
anticipated economic growth and
favourable price-to-earnings ratios
across the market. After three years
with no IPO activity, the Rwanda
Stock Exchange welcomed the IPO of
the Bank of Kigali in a privatisation of
governmental interest in the bank.
In contrast, elsewhere on the
continent, 2015 saw a major decrease
in IPO capital raised on the Nigerian
Stock Exchange and on the Bourse
de Tunis as compared to 2014. This
decline from 2014 on the Nigerian
Stock Exchange is due in large part
to the significance of the 2014 IPO
of SEPLAT, which was among the
top IPOs in 2014 in Africa by value.
Similarly, the variance in the Bourse
de Tunis activity from 2014 relates
to a single significant IPO of Delice
Holding, also among the 2014 top 10
African IPOs by value.
Over the five-year period as a whole,
a similar value of 63% of total IPO
volume and a higher 68% of total IPO
value were raised in exchanges in SSA
countries; the rest was derived from
North Africa and outbound IPOs.
The JSE remains a reliable anchor
of African capital markets activity,
ranking second in the world for
exchange regulation and first for
ease of raising debt or equity capital,
according to the World Economic
Forum’s Global Competitiveness Report
2015 – 2016. Since 2011, capital raised
from IPOs by companies on the JSE
represented 45% of the total African
IPO capital and 33% of the total
transaction volume.
Over this period, in second place in
terms of IPO volume after the JSE was
the Bourse de Tunis with 23 issuances,
while in second place by capital
raised was the Egyptian Exchange
with $861m. In third place in terms
of volume was the Casablanca Stock
Exchange with seven issuances, and
third by capital raised was the Nigerian
Stock Exchange with $751m, over 70%
of which relates to the 2014 SEPLAT
IPO.
On average during this period, capital
raised per IPO in total over the past
five years was $58m, with an average
of $77m on the JSE and $46m on other
African exchanges.
During 2015, 68% of total IPO volume
transacted and 39% of total IPO
value were raised on exchanges in
sub-Saharan Africa (SSA), with the
remainder made up by North Africa
and outbound IPOs.
PwC | 11
Figure 5: IPOs by African exchange*, 2011 - 2015
Capital
raised ($m)
Number of
IPOs
5
258
4
261
9
742
12
658
35
2 709
Johannesburg
5
790
3
247
4
261
8
734
9
640
29
2 672
Johannesburg AltX
0
0
2
11
0
0
1
8
3
18
6
37
0
0
0
0
0
0
1
109
4
752
5
861
Number of
IPOs
790
Number of
IPOs
5
Number of
IPOs
South Africa
Exchange country
Number of
IPOs
Capital
raised ($m)
Total
Number of
IPOs
2015
Capital
raised ($m)
2014
Capital
raised ($m)
2013
Capital
raised ($m)
2012
Capital
raised ($m)
2011
North Africa
Egypt
Tunisia
1
9
2
8
12
191
6
125
2
43
23
376
Morocco
3
50
1
3
1
122
1
127
1
74
7
376
Sub-Saharan
Africa excluding
South Africa
Nigeria
0
0
0
0
1
190
1
538
1
23
3
751
Kenya
2
76
2
75
0
0
1
7
1
35
6
193
Rwanda
2
91
0
0
0
0
0
0
1
39
3
130
Botswana
2
68
1
47
0
0
0
0
1
9
4
124
BVMAC**
0
0
0
0
1
66
0
0
0
0
1
66
Uganda
0
0
1
66
0
0
0
0
0
0
1
66
Mauritius
1
10
0
0
0
0
1
29
0
0
2
39
Tanzania
1
7
0
0
1
2
2
6
1
15
5
30
Mozambique
0
0
0
0
1
11
0
0
0
0
1
11
Zambia
0
0
0
0
0
0
1
9
0
0
1
9
BRVM***
0
0
0
0
0
0
1
7
0
0
1
7
Ghana
0
0
0
0
0
0
1
1
2
1
3
2
* Data includes IPOs listed on African exchanges and therefore excludes outbound IPOs. Companies listed on two exchanges or more are
accounted for on each exchange.
** The BVMAC serves the Central African Republic, Chad, Congo, Equatorial Guinea and Gabon.
*** The BRVM serves the countries of Benin, Burkina Faso, Guinea Bissau, Côte d’Ivoire, Mali, Niger, Senegal and Togo.
Source: Dealogic
12 | 2015 Africa Capital Markets Watch
Top 10 African IPOs by value 2015 and 2014
The top 10 African IPOs by value in
2015 took place in South Africa, Egypt
and Morocco.
IPOs of real estate and property
companies (within the financials
sector) specifically represented a
greater share of top 10 IPOs during
2015.
Figure 6: African top 10 IPOs by value, 2015 and 2014
Name
Capital Sector
raised $m
Country of
operation
Stock exchange
Top 10 IPOs 2015
Integrated Diagnostics Holdings plc
334 Health care
Egypt
London
Emaar Misr for Development SAE
299 Financials
Egypt
Cairo
Edita Food Industries SAE
267 Consumer goods
Egypt
Cairo/London
Orascom Construction Ltd
185 Industrials
United Arab Emirates Cairo/Dubai
Schroder European Real Estate Investment Trust
plc
162 Financials
United Kingdom
Johannesburg/
London
Balwin Properties Ltd
131 Financials
South Africa
Johannesburg
Novus Holdings Ltd
98 Industrials
South Africa
Johannesburg
Stor-Age Property REIT Ltd
80 Financials
South Africa
Johannesburg
Capital Appreciation Ltd
75 Financials
South Africa
Johannesburg
Total Maroc SA
74 Oil & gas
Morocco
Casablanca
Top 10 IPOs 2014
SEPLAT Petroleum Development Co Ltd
538 Oil & gas
Nigeria
Lagos/London
Alexander Forbes Group Holdings Ltd
348 Financials
South Africa
Johannesburg
Residences Dar Saada SA
127 Financials
Morocco
Casablanca
Arabian Cement Co (Egypt)
109 Industrials
Egypt
Cairo
Rhodes Food Group Holdings Ltd
100 Consumer goods
South Africa
Johannesburg
Pivotal Fund Ltd
92 Financials
South Africa
Johannesburg
Delice Holding SA
67 Consumer goods
Tunisia
Tunis
Equites Property Fund Ltd
61 Financials
South Africa
Johannesburg
Tharisa plc
47 Basic materials
South Africa
Johannesburg
Cartrack Holdings Ltd
44 Industrials
South Africa
Johannesburg
Source: Dealogic
PwC | 13
Share price performance of 2015 and 2014 top 10 African IPOs
impacted heavily as a result, leading to
an announcement in January 2016 of
Orascom’s intention to delist.
The Egyptian Exchange experienced
a fourth-quarter decline amid
heavy selling by foreign investors
and Egyptian financial institutions,
reflecting heightened geopolitical
tensions introduced by attacks on
tourist targets in October 2015.
Meanwhile, Rhodes Food Group
exhibited strong results, reflecting its
growth through acquisition and the
overall attractiveness of the food sector
in 2015.
Of the top 10 African IPOs in 2014,
SEPLAT’s share performance was
hit heavily as a result of the global
downturn in oil prices. Tharisa plc
also lost ground from its offer price,
potentially reflecting global mining
sector sentiment, coupled with
negative publicity, governance issues
and a regulatory shutdown following
workplace fatalities.
Unsurprisingly, some of the stocks
hardest hit in trading were those in
the tourism and real estate sectors,
with focus drawn to the outlook for
the Egyptian tourism industry as a
whole. Both Orascom Construction
and Emaar Misr share prices were
Other JSE shares with global revenue
streams, such as Schroder European
Real Estate Investment Trust (REIT)
and Equities Property Fund, based in
Europe and South Africa, respectively,
continued to perform well, as local
investors continue to seek exposure
to companies with non-rand
denominated income streams.
Figure 7 Share price performance of 2015 and 2014 top 10 African IPOs as at 31 December 2015
2015
-60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
11.1
Integrated Diagnostics Holdings plc
-27.9
Emaar Misr for Development SAE
41.7
Edita Food Industries SAE
Orascom Construction Ltd
-51
10
Schroder European Real Estate Investment Trust plc
-11.7
Balwin Properties Ltd
-9.4
Novus Holdings Ltd
-3
Stor-Age Property REIT Ltd
10
Capital Appreciation Ltd
3.8
Total Maroc SA
2014
-100% -80% -60% -40% -20% 0%
20% 40% 60% 80% 100%
-64.9
SEPLAT Petroleum Development Co Ltd
-20.9
Alexander Forbes Group Holdings Ltd
-40.5
Residences Dar Saada SA
10.6
Arabian Cement Co (Egypt)
95
Rhodes Food Group Holdings Ltd
-0.7
Pivotal Fund Ltd
-7.6
Delice Holding SA
27.5
Equites Property Fund Ltd
Tharisa plc
Cartrack Holdings Ltd
Source: Dealogic
14 | 2015 Africa Capital Markets Watch
-86.9
17.7
African IPO breakdown by sector 2011 – 2015
Over the past five years, the financials
sector led the African IPO market with
43% of total volume and 51% of total
value, driven in part by an increase
in property company listings, which
are expected to continue in popularity
in 2016, especially given the recent
introduction of listed REITs on the
Nairobi Securities Exchange. The oil
& gas and consumer goods sectors
followed in second place, each with a
total value of 11%.
When looking at global trends over
the same period, the financials sector
topped the sector list by total IPO
value. In terms of the sector profile
of IPOs, Africa shared the greatest
similarity with the Asia-Pacific region
(with the exception of oil & gas).
In both of these regions, financials,
industrials and consumer goods
contributed significantly to total IPO
value.
Figure 8: IPO breakdown by sector by value, 2011 – 2015
Figure 9: IPO breakdown by sector by volume, 2011 – 2015
2011 – 2015
2011 – 2015
2% 1%
1%
3%
3%
5%
2%
6%
9%
51%
11%
11%
Financials
Oil & gas
Consumer goods
Industrials
Health care
Consumer services
Utilities
Basic materials
Technology
Telecommunications
4%
6%
8%
43%
4%
13%
12%
5%
Source: Dealogic
PwC | 15
African IPO breakdown by sector in 2015
During 2015, the financials sector
continued to dominate the African IPO
market at 46% of total value and 50%
of total volume, followed by the health
care, consumer goods and industrials
sectors in terms of value. This is
consistent with global IPO trends,
where the financials sector proved to
be the most active sector in 2015.
Health care ranked second at 17% and
consumer goods third at 16% in terms
of IPO value in 2015.
Compared to the average over the last
five years, 2015 saw a slight decrease
in the financials sector and an increase
in industrials, consumer goods and
health care in terms of value; and
the industrials and consumer goods
sectors in terms of volume.
Figure 10: IPO breakdown by sector by value, 2015
Figure 11: IPO breakdown by sector by volume, 2015
2015
2015
2%
1%
<1%
4%
17%
4%
Financials
Oil & gas
7%
4%
Consumer goods
Industrials
46%
Health care
Consumer services
14%
50%
14%
Basic materials
Telecommunications
16%
14%
4%
Source: Dealogic
16 | 2015 Africa Capital Markets Watch
3%
African FO Market
African FO trends
2011 – 2015
Though the growth rate of 2015 FO
activity did not match that of the
prior year, the trend was distinctively
positive. During 2015, FO activity
increased by 20% in terms of
transaction volume and by 13% in
terms of value, compared to 2014.
Additionally, total FO capital raised
was bolstered by a $2.5bn offer on the
JSE by Naspers Ltd in December 2015,
which ranked among the top 10 FOs in
the entire EMEA region in 2015.
Figure 12: FO trends, 2011 – 2015
12 000
120
10 000
9 478
10 712
91
76
8 000
100
80
66
$million
Over the past five years, there have
been 336 FOs by African companies,
raising $35.2bn on both African and
international exchanges.
6 000
4 000
4 475
52
51
5 455
5 102
60
40
2 000
0
20
2011
FO Money raised ($m)
2012
2013
2014
2015
0
Number of FOs
Source: Dealogic
PwC | 17
African FO data by exchange 2011 – 2015
In 2015, capital raised from FOs by
companies on the JSE increased by
17% (in US dollar terms), whereas
proceeds from FOs on other African
exchanges increased by only 8%** from
$1.2bn in 2014 to $1.3bn**, reflecting
the value placed on the depth of an
established market during challenging
economic times.
There was a significant increase in
FO activity in terms of value on the
Bourse de Tunis during 2015, driven
by a large FO in the third quarter of a
state-controlled bank. Conversely, a
significant decrease in the Egyptian
Exchange by 62% was due to the nonrecurrence of a few large FOs in 2014.
JSE represented 85% of total African
FO capital raised and 67% of total
transaction volume.
Both during 2015 and over the trailing
five-year period, the vast majority
of FO activity, including outbound
FOs, was from sub-Saharan African
countries, representing 76% and 86%
in total FO volume, respectively, and
96%** and 92%** of total FO value,
respectively.
Over this period, in second place in
terms of FO volume was the Egyptian
Exchange, followed by the Nigerian
Stock Exchange.
On average during this period, FO
capital raised in total over the past
five years was greater than the IPO
average capital raised at $105m, with
an average of $134m on the JSE and
$81m** on other African exchanges.
Between 2011 and 2015, capital
raised from FOs by companies on the
Figure 13: FOs by African exchange*, 2011 - 2015
Capital
raised ($m)
Number of
FOs
Total
Capital
raised ($m)
Number of
FOs
2015
Capital
raised ($m)
Number of
FOs
2014
Capital
raised ($m)
Number of
FOs
2013
Capital
raised ($m)
Number of
FOs
2012
Capital
raised ($m)
Exchange country
Number of
FOs
2011
South Africa
30
2 992
37
4 828
35
4 458
52
8 156
70
9 579
224
30 013
Johannesburg
30
2 992
34
4 800
34
4 458
48
8 086
65
9 432
211
29 768
0
0
3
28
1
0
4
70
5
147
13
245
Egypt
7
346
1
3
1
88
1
522
3
199
13
1 158
Morocco
4
555
0
0
1
47
1
71
1
25
7
698
Tunisia
1
1
0
0
3
60
1
12
2
391
7
464
Sub-Saharan
Africa excluding
South Africa
Nigeria
0
0
2
224
2
424
2
359
4
512**
10
1 519
Kenya
1
117
3
239
0
0
2
46
0
0
6
402
Tanzania
1
73
0
0
0
0
0
0
1
74
2
147
Zambia
2
73
0
0
0
0
1
62
0
0
3
135
Mauritius
3
14
1
13
0
0
1
7
3
87
8
121
Ghana
2
115
0
0
0
0
0
0
0
0
2
115
Uganda
0
0
0
0
0
0
1
98
0
0
1
98
Zimbabwe
1
10
0
0
0
0
0
0
0
0
1
10
Johannesburg AltX
North Africa
* Data includes FOs listed on African exchanges and excludes outbound FOs. Companies listed on two exchanges or more are accounted for on
each exchange.
** Notice of errata: The 2015 FO capital raised on the Nigerian Stock Exchange has been adjusted from the amount included in the original
version of this publication released 1 February 2016.
Source: Dealogic
18 | 2015 Africa Capital Markets Watch
African FO breakdown by sector 2011 – 2015
FOs exhibited a sector composition
similar to that of IPOs over the past
five years, with the financials sector
comprising half of the FOs in Africa by
volume and 45% by value.
The consumer goods, health care
and basic materials sectors each
contributed 10% of total FOs’
value, while the basic materials and
industrials sectors contributed 18%
and 8%, respectively, in terms of
volume.
Figure 14: FO breakdown by sector by value, 2011 – 2015
Figure 15: FO breakdown by sector by volume, 2011 – 2015
2015
2015
<1%
2%
1%
7%
18%
Financials
10%
45%
1%
Oil & gas
Consumer goods
Industrials
8%
Health care
1%
6%
50%
Consumer services
Utilities
Basic materials
10%
Technology
Telecommunications
5%
10%
3%
4%
8%
6%
5%
Source: Dealogic
PwC | 19
African FO breakdown by sector in 2015
During 2015, there was a slight shift
in the sector composition of African
FO activity, with FOs in the financials
sector being lower than their five-year
average in terms of value. Conversely,
there was a significant increase in the
technology sector from 7% on average
to 23% in 2015, due in large part to
Naspers’ December rights issue of
$2.5bn.
The year saw a similar trend to the
FO sector breakdown by volume over
the past five years, during which the
financials sector contributed more
than half of the total FOs volume,
followed by the basic materials sector
at 14%.
Figure 16: FO breakdown by sector by value, 2015
2015
Figure 17: FO breakdown by sector by volume, 2015
2015
2% 1%
3%
14%
23%
36%
9%
4%
Financials
Oil & gas
Consumer goods
Industrials
Health care
Consumer services
Basic materials
Technology
Telecommunications
6%
57%
7%
8%
3%
17%
3%
2%
Source: Dealogic
20 | 2015 Africa Capital Markets Watch
2%
3%
African IPOs and FOs: Analysis of cross-border activity
2011 – 2015
Perhaps the clearest trend that has
persisted since 2011 is the interest
of African companies in executing
dual listings or raising further offers
on London’s stock exchanges, largely
the Alternative Investment Market
(AIM), which has proved a particularly
attractive market for companies from
emerging economies in Africa and
Asia.
One such example is Lekoil, the
Nigerian oil & gas exploration group
that raised $49 million upon its
flotation on the AIM in May 2013.
Less than six months later, the group
returned to the market to raise a
further $100 million at a share price
comfortably above its flotation price,
enabling further exploration work off
the Nigerian coast.
During the same period, the JSE
remained popular for inbound IPOs,
with only one other inbound listing in
Africa – the debut of the United Arab
Emirates’ Orascom Construction on
the Egyptian Exchange.
The year saw both greater inbound
and outbound global cross-border IPO
activity than 2014. However, of note
was the lack of intra-African crossborder IPO activity in 2015 despite
moves towards regional exchange
harmonisation. This likely reflects the
more common response over the past
year to use decreased listing barriers
as an opportunity to deepen liquidity
of shares via the introduction on
other African exchanges, with a view
towards future capital raising.
Cross-border activity will also be
assisted by the Fast Track listing
process for secondary inbound listings
on the JSE. Already in 2016, Belgian
brewing giant Anheuser-Busch (AB)
InBev launched a secondary listing
on the JSE through introduction, and
Mediclinic International is expected
to complete a secondary listing
transaction during the year.
Figure 18: Outbound and Inbound IPOs and FOs, 2011 – 2015
Outbound
Date
Issuer’s name
Country
Sector
Stock exchange
Capital
raised
($m)
IPO/
FO
09 April 2014
SEPLAT Petroleum
Development Co
Ltd
Nigeria
Oil & Gas
London; Nigerian Stock
Exchange
538
IPO
05 May 2015
Integrated
Diagnostics
Holdings plc
Egypt
Health Care
London
334
IPO
01 April 2015
Edita Food
Industries SAE
Egypt
Consumer
Goods
Cairo; London
267
IPO
15 May 2014
Aquarius Platinum
Ltd
South Africa
Basic Materials
Australian Stock Exchange;
Johannesburg; London
235
FO
08 August 2013
MiX Telematics Ltd
South Africa
Industrials
New York
116
FO
03 November 2011
Coal of Africa Ltd
South Africa
Basic Materials
AIM; Australian Stock
Exchange; Johannesburg
106
FO
01 November 2013
Lekoil Ltd
Nigeria
Oil & Gas
AIM
100
FO
11 July 2014
Delta International
Property Holdings
Ltd
South Africa
Financials
Bermuda; Johannesburg
87
FO
12 February 2013
Madagascar Oil Ltd
Madagascar
Oil & Gas
AIM
75
FO
01 April 2015
Fastjet plc
Tanzania
Financials
AIM
74
FO
10 August 2011
Elemental Minerals
Ltd
South Africa
Basic Materials
Toronto
64
FO
27 June 2012
Namakwa
Diamonds Ltd
South Africa
Basic Materials
London
56
FO
20 June 2011
Zambeef Products
plc
Zambia
Consumer
Goods
AIM; Zambia
55
FO
17 May 2013
Lekoil Ltd
Nigeria
Oil & Gas
AIM
49
IPO
PwC | 21
Outbound
Date
Issuer’s name
Country
Sector
Stock exchange
Capital
raised
($m)
IPO/
FO
28 October 2015
Lekoil Ltd
Nigeria
Oil & Gas
AIM
46
FO
06 August 2012
Coal of Africa Ltd
South Africa
Basic Materials
AIM; Australian Stock
Exchange; Johannesburg
45
FO
28 October 2013
Wentworth
Resources Ltd
Tanzania
Oil & Gas
AIM; Oslo
40
FO
19 April 2011
Masawara plc
Zimbabwe
Financials
AIM
38
FO
21 May 2014
Lekoil Ltd
Nigeria
Oil & Gas
AIM
38
FO
08 August 2011
Blackstar Group SE
South Africa
Financials
AIM; Johannesburg
15
FO
26 March 2012
Bushveld Minerals
Ltd
South Africa
Basic Materials
AIM
9
IPO
21 October 2015
KKO International
SA
Côte D’Ivoire
Consumer
Goods
Brussels - Alternext; Paris Alternext
7
IPO
10 December 2012
Premier African
Minerals Ltd
Togo
Basic Materials
AIM
2
IPO
17 November 2014
Central Rand Gold
Ltd
South Africa
Basic Materials
AIM; Johannesburg
2
FO
Date
Issuer’s name
Country
Sector
Stock exchange
Capital
raised
($m)
IPO/
FO
04 March 2015
Orascom
Construction Ltd
United Arab
Emirates
Industrials
Cairo; NASDAQ Dubai
185
IPO
03 December 2015
Schroder European United
Real Estate
Kingdom
Investment Trust plc
Financials
Johannesburg; London
162
IPO
14 October 2013
Investec Australia
Property Fund
Australia
Financials
Johannesburg
107
IPO
Inbound
Cross-border within Africa
Date
Issuer’s name
Country
Sector
Stock exchange
Capital
raised
($m)
IPO/
FO
12 November 2012
Umeme Ltd
Uganda
Utilities
Nairobi; Uganda Securities
Exchange
66
IPO
Source: Dealogic
22 | 2015 Africa Capital Markets Watch
African debt markets
African debt markets overview
In our inaugural analysis of the African
debt markets, we have focused on
the analysis of corporate HY and IG
debt, which contributed 99% of the
total corporate debt capital raised
since 2011, and a brief discussion on
supranational and sovereign debt
during this five-year period.
It should be noted that DCM activity
represents only a portion of the total
debt raising activity in Africa, with
a large component of debt funding
sourced from traditional bank
finance or other bilateral lending
arrangements with investment funds
that take place outside of the capital
markets.
African DCM activity has declined
since its peak in 2013, when African
governments and corporates
responded to initial signals of
impending US monetary policy
tightening by tapping debt markets.
As recently as 2007, South Africa,
Egypt and Tunisia were the only
African countries with sovereign bonds
in issue in international markets.
Since then, 15 countries have entered
the debt markets, introducing formal
credit analysis to guide country
risk assessment and paving the way
for expanded issuance by African
corporates in these countries. Other
advances in debt markets included the
2013 launch of a Nigerian over-thecounter trading platform, creating a
secondary market for local debt.
While debt issuances have declined
in volume and value since 2013,
sovereign and supranational
(including government agencies)
debt, particularly foreign currencydenominated debt, continues to
accumulate, introducing the discussion
during the past year about the
sustainability of the indebtedness of
some countries. There are a number of
views on both sides of this discussion,
but what is clear is the role this
funding has played in encouraging
debt market activity on the continent.
Over the past five years, 489 debt
transactions have taken place on
African debt markets or by African
companies on international markets,
raising $110.2bn, of which 72% was
US dollar-denominated.
Though African debt markets were not
as active in 2015 as in the previous two
years, the average of proceeds raised in
2015 was $411m per transaction, 26%
higher than 2014’s average of $326m
and 83% higher than the average per
transaction over the past five years of
$225m.
Figure 19: DCM activity*, 2011 - 2015
160
30000
142
10 100
140
25000
20000
103
$million
8 352
129
7 932
5 707
18 554
15 964
15000
10000
120
6 233
11 397
68
12 346
80
13 593
60
47
5000
0
100
40
20
2011
2012
2013
2014
2015
0
Corporate debt value ($m)
Sovereign and Supranational (including government agencies) debt value ($m)
Number of transactions
* Tranches within a deal are counted as a single issuance.
Source: Dealogic
PwC | 23
Figure 20: Breakdown of corporate debt by value, 2011 - 2015
Figure 21: Breakdown of sovereign and supranational
(including government agencies) debt by value, 2011 - 2015
Short-term
Debt
1%
Agency****
4%
Corporate Bond –
High Yield*
Sovereign,
Local Authority**
68%
31%
Corporate Bond –
Investment Grade*
Supranational***
28%
68%
* Investment grade and high-yield designation per Dealogic
** ‘Sovereign’ includes all debt issued by national or provisional governments, and local authorities.
*** ‘Supranational’ includes all debt issued by institutions organised at a world or regional level.
**** ‘Agency’ refers to issuers that carry out government objectives while not being legally owned by a government itself. Agency debt usually
carries an actual or implied government guarantee.
Source: Dealogic
24 | 2015 Africa Capital Markets Watch
African high-yield debt market
Trends between 2011 – 2015
In 2015, there was a significant
decrease of 57% in HY debt issued
by value as compared to 2014, with a
similar level of average proceeds raised
per transaction of $303m, as compared
to $309m on average over the past
five years. This decline likely reflects
a degree of caution in the market
in response to increased volatility
during the year, especially from those
companies looking to raise debt for
planned acquisitions.
Figure 22: African high-yield debt value and volume, 2011 – 2015
16
3 500
3 000
14
14
2 823
2 500
12
3 196
2 639
10
10
2 000
$million
Between 2011 and 2015, there were 38
African corporate HY debt issuances,
raising $11.7bn, of which 62% was US
dollar denominated and half of which
was raised under the US Securities and
Exchange Commission’s (SEC)
Rule 144A*, reflecting the strong
demand for high-yield debt securities
by US investors during this period.
1 879
8
1 500
1 000
1 210
5
5
4
500
0
6
4
2
2011
2012
2013
Value ($m)
2014
2015
0
Volume
Figure 23: African high-yield debt by SEC Rule 144A and volume, 2011 – 2015
HY debt proceeds have been raised
predominantly in US dollars during
the past five years, comprising 62% of
all proceeds, followed by the euro at
23%.
Unlike HY debt raised in more
developed markets, characteristics
of African HY debt instruments
(excluding South Africa) are more
commonly vanilla in nature; HY
ratings for such debt are largely driven
by the ‘ceiling’ on corporate credit
ratings imposed by a home country’s
own sovereign rating.
Rule 144A
50%
Not Rule 144A
50%
Figure 24: African high-yield proceeds by currency, 2011 – 2015
*SEC Rule 144A provides a non-exclusive
safe harbour from the registration
requirements of the United States Securities
Act of 1933 for sales of securities to
“qualified institutional buyers” (QIBs), a
term that encompasses banks, insurance
companies, certain trust funds, pension
plans, corporations and broker-dealers (but
not individuals), who meet certain ownership
and investment thresholds. Rule 144A
offerings have become popular among
foreign issuers as they provide a means
to raise capital in the US capital markets
without being subject to the registration and
reporting requirements of a public offering
with the SEC.
NGN
ZAR
GBP
4%
3%
Others
4%
4%
EUR
23%
USD
62%
Source: Dealogic
PwC | 25
African high-yield debt credit rating and average yield-to-maturity 2011 – 2015
Figure 25: African high-yield debt credit rating and average yield-to-maturity, 2011 - 2015
Bond ratings*
Number of
transactions
Average yield-tomaturity (%)
BB+/Ba1
3
6.9
BB
4
6.3
BB-/Ba3
3
9.3
B+
4
11.7
B
8
8.9
B-
4
10.3
CCC
1
13.4
Data not available
11
9.1
Grand Total/Total Average
38
9.0
* Selection of bond ratings in the table above reflects the availability of ratings information
for these issuances. S&P ratings have been used when available, followed by Moody’s
when available, followed by Fitch. 11 of the debt issuances have no publicly available rating
information.
Source: Dealogic, Bloomberg
26 | 2015 Africa Capital Markets Watch
African high-yield debt
by exchange nationality
2011 – 2015
Figure 26: African high-yield debt by exchange nationality, 2011 –2015
3 500
Over the past five years, the majority
of African HY debt was issued by South
African and Nigerian companies, at
42% and 41% by value, respectively.
2 500
$million
Our data highlights that a variety
of structuring methods and listing
destinations have been used in recent
issuances. We observe from this data
that during the period 2011-2015, HY
debt, unlike equity capital, was largely
raised outside the continent, with the
exception of issuances by Botswanan,
Nigerian and South African companies
on local exchanges, which accounted
for 7% of total proceeds raised, and
the Nairobi listing by East African
Breweries, accounting for less than 1%
of total proceeds.
3 000
534
2 000
650
1 500
3 070
2 669
1 885
1 000
1 149
939
500
0
220
80
126
2011
2012
2013
United States
Europe
154
271
2014
2015
Africa
Source: Dealogic
PwC | 27
Figure 27: African high-yield debt by deal issuer and exchange nationality, 2011-2015
Deal
nationality*
Issuer
nationality of
incorporation
Exchange nationality
Currency
code
Number of
transactions
USD
equivalent
proceeds ($m)
EUR
1
825
USD
1
250
Frankfurt Stock Exchange
EUR
1
573
New York Stock Exchange
EUR
1
534
Johannesburg Stock Exchange
ZAR
6
343
SIX Swiss Exchange
CHF
1
115
USD
1
1 050
EUR
2
841
Irish Stock Exchange
South Africa
South Africa
Austria
Luxembourg Stock Exchange
United Kingdom
London Stock Exchange
GBP
1
454
Irish Stock Exchange
USD
7
2 426
Oslo Børs
USD
1
575
Nigerian Stock Exchange
NGN
2
374
London Stock Exchange
USD
1
350
Irish Stock Exchange
USD
2
893
London Stock Exchange
USD
1
250
Nigeria
Nigeria
Netherlands
United
States**
Liberia**
New York Stock Exchange
USD
1
650
Mauritius
Mauritius
NASDAQ OMX Nordic (Stockholm)
SEK
3
312
Morocco
France
Luxembourg Stock Exchange
USD
1
297
Ghana
Ireland
Irish Stock Exchange
USD
1
253
Togo
Nigeria
Irish Stock Exchange
USD
1
248
Botswana
Botswana
Johannesburg Stock Exchange
ZAR
1
80
Kenya
Kenya
Nairobi Securities Exchange
KES
1
54
Grand
Total
38
11 747
* Deal nationality is a calculated nationality that combines the business nationality of the issuing entity with that of the originator or, if
undisclosed, the nationality of risk.
** The US deal relates to Royal Caribbean Cruises Ltd, a company incorporated in Liberia with global operations.
Source: Dealogic
28 | 2015 Africa Capital Markets Watch
Figure 28: African country credit ratings*, 2011 – 2015
A-
Botswana
BBB+
Mauritius
BBB
South Africa
Morocco
BBBBB+
BB
BB-
Nigeria
Kenya
B+
B
Ghana
B-
2011
2012
2013
2014
2015
*Only countries with a sovereign credit rating, which also had HY debt activity during 2011 – 2015, have been presented above.
Source: Thomson Reuters
African high-yield debt by
industry 2011 – 2015
Over the period 2011-2015, African
HY debt was mainly raised by
companies in the financials sector,
which comprised 58% of total HY debt
volume and 47% of total value.
Sector composition for HY debt over
this period is similar to that observed
for ECM activity during this time.
Figure 29: African high-yield debt by industry, 2011-2015
Industry
Financials
Volume
Value
($m)
22
5 544
Consumer goods
5
2 236
Basic materials
3
1 891
Industrials
3
704
Oil & gas
1
575
Utilities
2
514
Telecommunications
1
250
Technology
1
33
38
11 747
Total
Source: Dealogic
PwC | 29
African investment-grade debt market
Trends between 2011 and 2015
Over the past five years, the African
DCM saw 215 African corporate
investment-grade debt transactions,
raising $26.2bn, of which 66% was
denominated in US dollars. Unlike HY
debt raised during this period, only
6% of IG proceeds were raised under
SEC Rule 144A, which is consistent
with the relatively higher US investor
demand for yield.
IG debt activity by African companies
during 2015 was event-driven,
decreasing by 17% as compared
to 2014 in terms of volume, while
increasing in value by 32% as
compared to 2014. Of the $4.5bn
raised, 53% relates to significant
transactions by Eskom and Naspers Ltd
during the year.
The currency composition of IG debt
proceeds is similar to that of HY
debt, though with slightly less US
dollar-denominated proceeds and
a somewhat larger share of rand
proceeds, due to domestic activity by
South African companies.
Figure 30: African investment-grade debt value and volume, 2011 – 2015
8 000
100
6 000
6 686
80
65
70
5 944
5 683
$million
90
84
7 000
5 000
4 000
60
4 466
44
40
3 375
3 000
30
2 000
12
1 000
0
50
10
20
10
2011
2012
Value ($m)
2013
2014
2015
0
Volume
Figure 31: African investment-grade debt by SEC Rule 144A
and volume, 2011-2015
Figure 32: African investment-grade proceeds by currency,
2011 – 2015
Rule 144A
GBP
EUR
6%
Others
4%
4%
4%
USD
ZAR
EUR
GBP
Others
ZAR
22%
USD
66%
Not Rule 144A
94%
Source: Dealogic
30 | 2015 Africa Capital Markets Watch
Figure 33: African investment-grade proceeds by currency and average yield-to-maturity, 2011 – 2015
Currency code
Average yield-to-maturity
NGN
12.76
ZAR
8.67
GBP*
7.38
USD
4.87
EUR
4.11
CNH
3.95
CHF
3.04
Average yield-to-maturity
7.63
*
Yield-to-maturity data for debt raised in pounds sterling reflects the subordinated nature of
the specific debt instruments.
Source: Dealogic
African investmentgrade debt by exchange
nationality 2011 – 2015
Figure 34: African investment-grade debts by exchange nationality and value, 2011-2015
8 000
7 000
1 340
6 000
$million
The story of African IG debt over the
past five years is, predictably, a largely
South African affair, with issuance
across global exchanges dominated by
South African companies or subsidiary
entities. Exceptions include $2.8bn
raised by Morocco’s Groupe OCP on
the Irish Exchange.
2 099
5 000
4 000
2 735
4 113
2 669
288
3 000
4 298
2 842
2 000
2 959
1 000
0
1 570
1 003
2 611
128
168
2011
2012
2013
2014
2015
United States
Europe
Africa
Source: Dealogic
PwC | 31
African investment-grade
debt by industry
2011 – 2015
Over the past five years, 35% of
African IG debt proceeds were raised
in the financials sector, represented
almost entirely by local and
international divisions of major South
African banks and insurers, followed
by the utilities sector at 15%, reflecting
capital raised by South Africa’s stateowned power utility, Eskom.
Eskom subsequently lost its IG credit
rating in March 2015, following
months of power interruptions and a
series of executive suspensions that
cast doubt on corporate governance
structures at the utility.
Outside of financials, a fairly equal
share of proceeds was raised by
companies in the oil & gas, basic
materials, telecommunications and
industrials sectors, most of which are
household names in South Africa.
32 | 2015 Africa Capital Markets Watch
Figure 35
African investment-grade debt by industry, 2011-2015
Industry
Volume
Value ($m)
166
9 253
Utilities
3
3 957
Oil & gas
4
3 058
Basic materials
6
2 970
Financials
Telecommunications
4
2 952
23
2 693
Consumer services
2
562
Consumer goods
5
439
Health care
2
270
215
26 154
Industrials
Total
Source: Dealogic
Contacts
For a deeper discussion about our capital market offerings in Africa, please
contact one of our practice leaders below.
East Africa
West Africa
Global IPO Centre
André Bonieux
[email protected]
+230 404 5061
Omobolanle Adekoya
[email protected]
+234 (1) 271 1700 ext 3102
Clifford Tompsett
[email protected]
+44 20 7804 4703
Anthony Murage
[email protected]
+254 20 285 5347
Darrell McGraw
[email protected]
+234 706 401 9361
Francophone Africa &
Maghreb
Southern Africa
Philippe Couderc
[email protected]
+212 5229 99801
North Africa
Steve Drake
[email protected]
+971 4 304 3421
Craig Du Plessis
[email protected]
+27 11 797 4055
Andrew Del Boccio
[email protected]
+27 11 287 0827
Nicholas Ganz
[email protected]
+27 11 797 5568
Peter McCrystal
[email protected]
+27 11 797 5275
Coenraad Richardson
[email protected]
+27 11 797 4713
Acknowledgements
We extend our thanks to everyone who contributed to PwC’s 2015 Africa
Capital Markets Watch. This marks the first year in the life of the Africa Capital
Markets Watch series, and our second look at equity capital markets in Africa. In
particular, we would like to thank Andrew Del Boccio, Laure Fine, Chi Le,
Alice Tomdio and Christine Van Den Bos for their important contributions.
PwC | 33
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