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Nairobi opens second derivatives market in sub-Saharan Africa

Nairobi Securities Exchange stockbrokers (photo credit: Nation Media Group)

The Nairobi Securities Exchange says the first trades on its new derivatives market NEXT went smoothly on 4 July, according to media reports. The NEXT market is set up to trade equity index futures and single stock futures. Initially trading is offered in 5 single stock futures and futures on the NSE 25 Index.

The NSE is the second exchange in sub-Saharan Africa after Johannesburg to launch derivatives trading. According to a Business Daily news report, this week’s launch is a soft launch restricted to a few investors, and the market will open to all investors after a week of trials.

Xinhua news agency reports a statement from NSE: “The NSE NEXT derivatives market has successfully conducted its first futures trades. The initial trades were executed by Standard Investment Bank and Kingdom Securities who cleared through the Co-operative Bank of Kenya.”

The market is mostly for individual and institutional investors looking to better manage risks, hedge, arbitrage and speculate over the future value of the participating stocks and the index.

Regulator approves

The Capital Markets Authority (CMA) regulator gave approval to the NSE to launch and operate the “Derivatives Exchange Market” in an announcement on 29 May. This paved the way for Thursday’s launch.

Paul Muthaura, CMA Chief Executive, stated: “‘The approval granted to the NSE to operationalize a derivatives market marks the achievement of a flagship project under the economic pillar of Kenya’s Vision 2030. The derivatives market will facilitate deeper and more liquid capital markets and position Kenya closer to becoming the heart of capital markets investment in Africa, as envisioned in the Capital Markets Master Plan”.

Other financial and commodity derivatives will be introduced later.

The launch follows a successful 6-month derivatives pilot test phase in July-Dec 2018, and resolution of key issues that arose. Stanbic Bank and the Co-operative Bank of Kenya have been approved by the banking regulator Central Bank of Kenya to provide clearing and settlement for the derivatives market.

NSE has been working with CMA and other stakeholders for years to prepare for the launch, as reported in this blog in December 2014.

What can you trade?

Investors are initially offered single stock futures targeting 5 liquid stocks: Safaricom, East African Breweries, Equity Holdings, Kenya Commercial Bank (KCB) and BAT. They can also trade equity index futures based on the NSE 25 share index, that represents the performance of 25 blue-chip listed firms. The index was launched by the bourse in October 2015 as part of preparations for the NEXT derivatives market.

Initially 7 stocks were targeted but the NSE requires that they have a minimum KES 50 billion ($487 million) market capitalization and minimum average daily turnover of KES7m.

According to a report on 4 July in Business Daily, state-run Kenya Electricity Generating Company (KenGen) with a market cap on 3 July of KES 39bn and Bamburi Cement (KES 41bn on Wednesday) have been excluded from futures trading after failing the minimum capitalization test.

The newspaper reports NSE chief executive Geoffrey Odundo’s statement: “All futures contracts listed on NEXT will have quarterly expiry dates; this will be the third Thursday of March, June, September and December of every year. All NEXT futures contracts will initially be cash settled.”

Trading fees have been pegged at 0.17% of the total value for single stock futures and 0.14% for index derivatives, compared to trading fees on equities ranging from 1% to 2%. According to an earlier Xinhua report, Rufus Kariuki, manager of derivatives at NSE, said that the derivatives will be settled at the end of each trading day to reduce risk of default by investors.

One contract will be equivalent to 1,000 underlying shares for stocks trading below KES 100 (Safaricom, KCB, Equity and KenGen), while for those trading above KES 100 (BAT, EABL and Bamburi), a contract will equal 100 underlying shares. One index point will equal KES 100 under NSE trading rules for derivatives.

The NSE has set aside KES 130m ($1.27m) for the settlement guarantee fund that will insure investors against counterparty default risk as part of preparations to operationalize the derivatives market.

The NSE expects derivatives trading will boost liquidity. There are 65 listed firms. Telecoms companies and banks are among the most heavily traded.

Africa issuers raised $341m in 6 months, down 28%

Enterprises based in Africa raised $341 million through equity issues in the first half of 2019, down 28% on the $472m raised in the first half of 2018. Law firm Baker McKenzie has published its Cross-Border IPO Index for H1 2019, using data sourced from Refinitiv, and says this was mainly because only $85m was raised from 4 initial public offers (IPOs) on African exchanges, down 80% from $419m from 4 IPOs in the first half of 2018.

The numbers exclude mega issues by Africa-focused issuers based outside Africa. These include $750m raised on 28 June by the IPO for UK-headquartered Airtel Africa (read about the slow first day) which operates in 14 countries; and $196m raised by pan-Africa e-commerce Jumia Group (headquartered in Germany) on the New York Stock Exchange in April, see our article about the share price performance since then. Jumia sells in 13 African countries and is top e-commerce website with over 15m monthly visitors in Nigeria.

Wildu du Plessis, Head of Capital Markets at Baker McKenzie in Johannesburg, says in a press release: “The drop in African IPO values in H1 2019 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.”

Egypt buzzing

Listing bell and trading floor of the Egyptian Exchange

Baker McKenzie says 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 Egyptian Exchange (EGX) and is prompting companies to consider share sales.

In April Khalid Abel Rahman, Assistant Minister of Finance for Capital Market Affairs, said the Government was embarking on an IPO programme is to raise EGP100bn ($5.8bn). Mohamed Farid, Chairman of the Egyptian Exchange, said that three private companies expect to launch initial public offerings (IPOs) before the end of 2019,

Baker McKenzie says a large IPO is Carbon Holdings Ltd, expected to raise $250m by selling a 30% stake and listing in London and Egypt. The company has missed the Q2 timetable mentioned by Karim Helal, Managing Director of Corporate Finance and Investor Relations, in this article last September. EFG Hermes is acting as advisor and global coordinator for the IPO, Baker & McKenzie is local legal counsel, and White & Case is international counsel.

Another large IPO is expected from Banque du Caire SAE, owned by Egypt’s second-largest state-owned bank Banque Misr. The bank has announced it will offer a 20%-30% of its shares for sale through private placement and public offering. The offer is expected to raise $300m-$400m and is forecast to happen in Q3 or Q4.

Hard work in South Africa

Du Plessis warns that governance concerns held back capital raising 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,” Du Plessis says.

Life returns in Nigeria

Du Plessis adds: “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”. Baker McKenzie’s recent Global Transactions Forecast predicts more IPOs in Nigeria in the next 3 years. “Hopefully this is the start of a long upswing in capital raising activity in the country,” says Du Plessis.

Not specifically mentioned was the $5.1bn listing of MTN Nigeria on the Nigerian Stock Exchange (see article), which is expected to be followed by a public offering of shares soon.

By sector (details from Baker McKenzie, Enko Capital and other sources)

Energy and power: South African company Renergen Ltd, which produces natural gas and helium, in an IPO in Australia offered 12.5m shares at AUD0.80 to raise AUD10m ($7m) for its Virginia Gas Project in South Africa. Financial: Banking group Oragroup listed on the Bourse Régionale des Valeurs Mobilières (BRVM) in April after a successful IPO in Oct-Nov 2018, selling 20% of the shares to raise XOF56.92bn ($101.2m) in the largest share offer on the BRVM.
Technology: It was reported by Enko that telco Mascom could do an IPO in Botswana later this year and Econet’s Strive Masiyiwa says it will be in October and will be the biggest listing on the Botswana Stock Exchange, according to this report. Namibia’s MTC (Mobile Telecommunications Corporation) has announced plans for an IPO in Mar-June 2020.
Real estate: ICON Properties PLC’s IPO last December in Malawi raised $19.3m, and the shares were listed on the Malawi Stock Exchange in January.
Industrial: Skyway Aviation Handling Co (SAHCOL) in Nigeria launched an IPO in November 2018 but only raised NGN1.2bn ($3.4m) compared to a target of NGN1.9bn ($5.2m) despite extending the offer until January. It listed on the Nigerian Stock Exchange on 24 April.
Healthcare: Speed Medical SAE raised EGP21.5m ($1.3m), less than half its target in a domestic IPO before listing on the Egyptian Exchange in April. Consumer: Eastern Tobacco, listed on the EGX, announced in March that it had raised EGP1.7bn ($104m) through offering 4.5% of its shares in public and private offers.

Global Outlook

The Africa picture mirrors a global 37% fall in capital raised through IPOs in global markets, compared to the first 6 months of 2018. According to Baker McKenzie, a total of $69.8bn 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. “

Koen Vanhaerents, Baker McKenzie’s Head of Global Capital Markets, says: “.. significant political issues stifled activity, along with a change in investor sentiment towards risk – particularly among pre-revenue companies.” The decline “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 6 months of 2019 due to uncertainties surrounding the UK’s exit from the European Union. Overall capital raised fell by 67% compared to the same period in 2018 to $9.2bn while the number of IPOs fell by 61% 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 $2.7bn from 12 listings. Seven of these listings were from the financials sector and raised almost $2bn, the largest of which was Network International’s $1.4bn IPO.

Second to London was Borsa Italiana with $2.3bn from 7 listings, boosted by the $2.2bn Nexi SpA listing. SIX Swiss exchange pulled in $1.9bn from 2 IPOs, with Stadler Rail’s debut accounting for $1.3bn of that.

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, fueling 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.

Weak reception for Airtel Africa $750m IPO

Share price chart from ADVFN ( https://uk.advfn.com/stock-market/london/airtel-africa-AAF/share-chart )

Shares in Africa’s second biggest telecom company had a disappointing start in conditional trading on the London Stock Exchange today. The initial public offer had been priced at the bottom of the 80p-100p range, and in exchange trading it quickly plummeted 16% from 80p and by 4pm the shares had retreated to around 67p.

Today the trading was conditional, only for holders allocated shares in the global IPO. The shares are set to start trading unconditionally on the LSE from 3 July and Airtel Africa will be dual-listed on the Nigerian Stock Exchange from 5 July.

The offer of 744.0m shares had raised approximately £595 million ($750m), including 39.2m shares offered to Nigerian institutional and high net worth investors for a total Nigerian offer of some $39.4m.

According to this morning’s stock exchange news service RNS announcement : “The offer was oversubscribed with strong interest from a variety of reputed global investors across the United Kingdom, United States, Africa, Europe, Middle East and Asia. Dominant allocation to Global long only, strategic and pre-IPO investors.”

There is an over-allotment option of 67.6 new shares which, if exercised in full, would account for approximately £54m of the offer. Including the overallotment option, the market capitalization at this afternoon’s price is some £2.6bn ($3.2bn), down from the offer valuation of £3.1bn.

After the IPO the free float was 19% but after including pre-IPO investors holdings the free float will be over 25% and it aims to be included in FTSE UK indices.

According to the RNS announcement, Raghunath Mandava, CEO of Airtel Africa, said: “We are delighted by the strong response we have received.. This is a proud moment for the team that has built Airtel Africa into the second largest mobile operator in Africa. We are now the first telecom company to simultaneously list on the Premium segment of the London Stock Exchange and Nigerian Stock Exchange through an IPO.”

According to our article in January and this month in here and today’s article in the Financial Times a consortium of investors including SoftBank Group, Singapore’s sovereign wealth fund Temasek, Singapore Telecommunications and private equity firm Warburg Pincus invested $1.25bn at a valuation of around $4.4bn last October. In January this year Qatar Investment Authority invested $200m at a valuation closer to $5bn.

At that stage it was anticipated that the London and Nigeria IPOs would raise $1.25bn.

The IPO was advised by 8 global banks: JP Morgan, Citigroup, BofA Merrill Lynch, Absa Group Limited, Barclays Bank PLC, BNP Paribas, Goldman Sachs International and Standard Bank.

Indian parent Bharti Airtel aims to use the funds to slash debt and free cash to combat rival Reliance Jio Infocomm in India.

Airtel Africa is the holding company for Bharti Airtel’s operations in 14 countries, including Kenya, Tanzania, Nigeria and Ghana. It is Africa’s second largest telco with over 94m customers, and ranked in the top 2 carriers in most of the countries where it operates, offering 2G, 3G and 4G services, plus mobile commerce through Airtel Money.

Performance had improved after years of losses against financially stronger telco players in Africa, including Vodacom. Rising mobile data consumption had helped it reach a first full year of profit and the figures for the year to 31 March were revenue of more than $3bn and operating profit of $734m.

Airtel Tanzania HQ (photo by Prof.Chen Hualin creative commons by Wikipedia)

Africa’s DFIs proud at banking awards gala

Two leading African development finance institutions led the pack at this week’s African Banker Awards. Bank of the Year 2019 goes to Afreximbank, making giant steps in growing profitable operations in financing and promoting trade within and from African and launching many key new products in the past 18 months.

African Banker of the Year is Admassu Tadesse, President of Trade and Development Bank and from Ethiopia. The bank – formerly PTA Bank –  has been expanding its operations in East and Southern Africa and launched many new products.

Olukayode Pitan of Bank of Industry (left) awards African Banker of the Year 2019 to Admassu Tadesse of Trade and Development Bank

The African Banker Awards spotlight and celebrate excellence in banking and finance in Africa. The 2019 winners were announced at a prestigious gala dinner in Malabo, Equatorial Guinea, on the fringe of the annual meeting of the African Development Bank.

“I am very honoured to be a judge. It’s exciting to read the submissions about many top-quality African institutions and excellent leaders. Its very hard to choose winners from many inspiring entries, including giant investments and transactions that are transformational for African economies.” Tom

South African banks dominated in tightly-contested investment banking and in the deals of the year. Absa won investment bank of the year; Standard Bank and RMB won the equity deal of the year with the VIVO Energy’s £548m ($742m)  IPO in London (see our story); debt deal of the year went to Rothschild & Co for Senegal’s dual-currency Eurobond ($1bn and €1bn); and infrastructure deal of the year went to Credit Agricole and TDB which financed a floating liquefied natural gas (LNG) platform in Mozambique. 

In other categories: Ecobank won retail bank of the year; Kenya’s KCB won the prize for innovation; Equity Bank for its CSR activities; and Nigeria’s Bank of Industry won the prize for financial inclusion.

Overall there were excellent winners from most African regions in 2019. Organizers and the 2 main sponsors of the awards, the African Guarantee Fund and the Bank of Industry, called to make banking more inclusive, both in gender representation among senior managers and through lending to small and medium sized enterprises (SMEs).  

The 2019 lifetime achievement award went to South African Sizwe Nxasana, former CEO of First Rand group, which grew at a compound annual growth rate of 20% under his leadership. In his speech, Nxasana called for even greater investment in human capital to accelerate growth in Africa. The African Banker Icon award was for Mitchell Elegbe, founder of Interswitch, the payments service provider another Africa-led “unicorn”, a tech start-up business whose value is likely to exceed $1bn (see our story).

Tarek Amer, Governor of the Central Bank of Egypt, won Central Bank Governor of the Year for his work in restoring faith in Egypt’s markets, helping make it one of the best-performing emerging markets. Benin’s Romuald Wadagni won Finance Minister of the Year, after big improvements to macro-economic indicators and structural transformation reforms.

Omar Ben Yedder, Publisher of African Banker magazine, said: “2018 was another strong year for banks. Undoubtedly fintech was the most buoyant sector in terms of tech investments and we are yet to truly see the transformative impact it can have. Despite the positive stories from the banking sector, the words of the winner of our Banker of the Year still resonate when he said last year at the Africa Investment Forum: we need to speed up, scale up and synergize. ”


THE 2019 AFRICAN BANKER AWARD WINNERS
 
African Banker of the Year
Admassu Tadesse, TDB

Lifetime Achievement Award
Sizwe Nxasana, former CEO, First Rand Group 

African Banker Icon
Mitchell Elegbe, Founder, Interswitch Group

African Bank of the Year
Afreximbank

Minister of Finance of the Year 
Romuald Wadagni, République du Benin

Central Bank Governor of the Year 
Tarek Amer, Central Bank Governor, Egypt
 
Best Retail Bank in Africa
Ecobank
 
Investment Bank of the Year
Absa Capital
 
Award for Financial Inclusion
Bank of Industry, Nigeria

Special Commendation for their contribution to the development and financing of the Rural Sector: Banco Nacional de Guinea Ecuatorial (BANGE)
 
Socially Responsible Bank of the Year 
Equity Bank, Kenya
 
Innovation in Banking 
KCB, Kenya

Special Commendation: JUMO, South Africa

Deal of the Year – Equity
Vivo IPO
Standard Bank & Rand Merchant Bank (South Africa)
 
Deal of the Year – Debt
$2.2bn Senegal Eurobond
Rothschild 

Infrastructure Deal of the Year 
Mozambique Floating LNG
TDB & Credit Agricole

Regional Bank of the Year
East Africa – KCB, Kenya
West Africa – Orabank
North Africa – Banque de l’Habitat (Tunisia)
Southern Africa – Mauritius Commercial Bank
Central Africa – BGFI, Gabon

Bumpy ride when African tech unicorn Jumia comes to NYSE

Jumia share price from Yahoo Finance

Investors in Africa’s technology unicorn company Jumia have had a bucking bronco ride since it listed American Depository Receipts (ADRs, representing shares) on the New York Stock Exchange (NYSE). Similarly the company is learning fast that the world’s most developed public markets still have elements of the Wild West,

Jumia has seen the price of the ADRs more than double since it started trading on 12 April at $18.95, after an initial public offer (IPO) when people bought in at $14.50 a share. By 1 May it had climbed to $46.99, an impressive 224% increase for IPO investors.

The listing was the first IPO by an African startup on a major global exchange and the issue of 13.5m ADRs, representing shares accounting for 17.6% of the company, raised $196m for the e-commerce firm.

A report by US media company Citron Research published on 9 May claimed investors had been misled about the business model and revenues of Jumia in Africa The ADRs were already trading and the report triggered  started to slip back, when the report came out there were two days of heavy trading and the price crashed nearly 25% to $24.50 on 10 May before sliding back to $19.92 by 17 May. US lawyers started preparing class-action lawsuits against Jumia.

On 13 May Sacha Poignonnec and Jeremy Hodara, co-CEOs of Jumia countered by releasing first-quarter results early, showing 58% growth in gross merchandise value (GMV) representing the total value of merchandise sold before deducting fees, and 102% increase in revenue. They said: “.. year-on-year improvement of 356 basis points of operating loss as a percentage of GMV and further development of JumiaPay, highlighted by the investment by and partnership with Mastercard. We believe that Jumia is increasingly relevant for consumers and sellers in Africa.”

Jumia background

Jumia was launched in 2012 as Africa Internet Group in 2012. Germany’s Rocket Internet, an incubator and venture capital fund based in Berlin, supported it and still owns 20.6% of the shares.

Its operates in 14 African countries, offering goods and services including online takeaway food, travel bookings and classified advertisements. In Nigeria it operates JumiaPay payment platform and a delivery service of leased warehouses, trucks and motorcycles, and allows African traders to sell online with more than 81,000 active sellers (defined as a retailer who received an order on Jumia in the last 12 months). The prospectus said there were 4m active shoppers, up from 2.7m a year before.

In 2016 it was valued at $1bn – earning the title “tech unicorn” – in a funding round involving South Africa’s Mobile Telecommunications Networks MTN, which owns 29.7% of the shares, investment bank Goldman Sachs, French insurer AXA and French telco Orange. Mastercard Europe snapped up $50m in Jumia ordinary shares before the New York IPO.

CEOs Jeremy Hodara and Sacha Poignonnec are French, both former employees of consultancy firm McKinsey, and the company is incorporated in Berlin. However it has corporate presence and pays taxes in Africa, has its headquarters in Lagos, operates exclusively in Africa, and employs more than 5,000 people in Africa. Juliet Anammah, the Nigerian CEO of the main country operation rang the NYSE ceremonial trading bell. Two Nigerian tech entrepreneurs Tunde Kehinde and Raphael Afaedor were co-founders but both left in 2015 to create other companies.

The company was still making heavy EBITDA losses of €172m in 2018, compared to revenues of €131m on gross merchandise volume of €828m, up from revenues €94m in 2017. Accumulated losses by 31 Dec 2018 were €862m. It has no plans to pay dividends and will focus on acquiring sellers and consumers, growing technology infrastructure and sales and marketing expenses.

A McKinsey report suggests African consumers will spend $2.1trn by 2025, and e-commerce could be 10% of that. Many tech firms take years to reach profitability and Jumia’s track record is only encouraging enthusiastic New York buyers.

Airtel Africa confirms June $750m listing in London

Airtel Tanzania HQ (photo by Prof.Chen Hualin – Own work, CC BY-SA 3.0, creative commons by Wikipedia

Airtel Africa has confirmed that it is going ahead in June 2019 with its $750 million listing on the main market of the London Stock Exchange, as flagged up in January in our article. Owned by India’s Bharti Airtel, it is Africa’s second biggest mobile operator with operations in 14 countries and has 99m subscribers and 14.2m mobile money customers.

It said this week that it is aiming for a premium listing on the main market of the LSE, meaning it will float at least 25% of hits shares. It could offer up to 15% more shares through an overallotment option, according to a report in Financial Times which reports that the group says the exact number of shares to be sold and the indicative price range of the offer will be determined “in due course”.

Airtel will use the proceeds to cut the ratio of net debt to EBITDA (earnings before interest, tax, depreciation and amortization) to 2.5x, according to City AM. It also plans to expand data and mobile money services across Africa.

It is also considering a listing on the Nigerian Stock Exchange, according to reports.

Advisers and joint bookrunners appointed are JP Morgan, BofA Merrill Lynch, Citigroup, Absa, Barclays, BNP Paribas, Goldman Sachs, HSBC and the Standard Bank of Africa but the sole as its advisers. JP Morgan will be sole sponsor; BofA Merrill Lynch, Citigroup and JPMorgan will also act as joint global co-ordinators.

The amount to be raised in the listing is down from the figure of $1bn given by Reuters on 28 May quoting Airtel, and the $1.25bn figure in January and February.

For the year to 31 March it posted revenue of more than $3bn and operating profit of $734m. For more background on the shareholders and earlier capital raises, read our earlier report.

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African Banker Awards coming up 11 June 2019

The African Banker Awards 2019 are coming up next week during the African Development Bank annual meeting in Malabo, Equatorial Guinea. Dynamic banks are competing for awards including:

  • African bank of the year
  • African banker of the year
  • Investment bank of the year
  • Best retail bank
  • Innovation in banking and 5 other categories

For a full list of entries, including the African megadeals competing for debt and equity deals of the year, see the awards website.

Omar Ben Yedder, the Group Publisher and Managing Director of IC Publications Group, which publishes African Banker Magazine, said:
“We have received a record amount of entries this year. The banking industry is being disrupted by technology and one could sense that the sector is embracing this technology to develop solutions that will truly benefit the real economy. Financial inclusion lies at the heart of formalising our industries and fintech is playing a role in bringing finance to the masses. ” 

The awards are held under the patronage of the African Development Bank and are sponsored by The African Guarantee Fund and The Bank of Industry. The Gala Dinner and Awards presentation will take place at the Gaviota, by the Sofitel Sipopo, Malabo. 

MTN Nigeria shares soaring after $5bn listing

Telecommunications firm MTN Nigeria has had strong days of trading since it joined the Nigerian Stock Exchange in a listing by introduction on 16 May. As it moves closer to what the company may feel is “fair value”, chances of a future initial public offering (IPO) increase.

The $5.1bn listing of 20.4 billion (20,354,513,050) ordinary shares of MTN Nigeria Communications Plc (MTNN) at N90 per share on the Premium Board makes it the second biggest stock on the NSE after Dangote Cement plc and ahead of Nestle Nigeria plc, according to Bloomberg. It is the Nigerian unit of MTN Group Ltd, Africa’s biggest mobile-phone company.

Journalist Shola Lawal writing in Mail and Guardian newspaper described the scene: “At exactly 2.30pm, when the stock market closed on Thursday, MTN Nigeria’s chairperson Pascal Dozie and Ferdi Moolman, MTN Nigeria’s CEO, excitedly clanged metal sticks on a gong on the crowded trade floor at the Nigerian Stock Exchange (NSE) building. The room, filled with brokers in their maroon jackets, erupted in celebration.”

The shares were priced at N90 and have since climbed some 10% a day to reach N119.75 by close of business on 20 May. The main shareholders are only letting a few shares go until the share gets a higher price, according to an interesting interview by Kayode Omosebi, Team Lead, Financial Advisory at ARM Securities on CNBC. He estimates the stock will keep moving until it gets past N130 when more stock could become available, but his firm estimates “fair value” at N149.

Omesebi adds that interest has been wide including retail investors, and could spark a revival of interest in other equities. It will also widen liquidity across telecom stocks in Africa as investors will have a wider range of shares in South Africa, Kenya, Ghana and other markets.

The NSE listing is part of a settlement with the Federal Government of Nigeria after a $5.2bn fine was imposed for failing to meet at 2016 deadline to register SIM cards. In September 2018 there was a $2bn bill for back taxes, and the Central Bank of Nigeria said it has illegally repatriated $8.1bn between 2007 and 2015.

The initial plan was for a share offer or IPO, and MTN Chairman Dozie was not giving any timetable for when that will come: “We were to have an IPO but due to unforeseen circumstances we couldn’t. Half bread is better than none.”

Oscar Onyema, Chief Executive Officer of NSE, said in a press release: “Having MTN Nigeria listed in our market is a testament of the exchange’s commitment to building a dynamic and inclusive market and creating channels for sustainable investment. This listing will promote liquidity for MTN Nigeria, enhance its value and increase transparency, as our platform remains one of the best avenues for raising capital and enabling sustainable growth for national development”.

Analysts also hope that the listing will encourage international oil companies and two other key telecoms firms, Airtel and Globacom.

Mail and Guardian quotes Ugo Obi-Chukwu, founder of leading financial literacy website, Nairametrics: “The last time we had any major listings was in the early 2000s and it was the Government that stimulated those listings… This will open the floodgates for more listings and possibly renew an interest in the stock market.”

The premium board is “a listing segment for the elite group of issuers that meet The Exchange’s most stringent corporate governance and listing standards. This Board features Dangote Cement Plc, FBN Holdings Plc, Zenith International Bank Plc, Access Bank Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and United Bank for Africa Plc,” according to the NSE.

Work starts on African exchanges linkage project

Africa’s stock exchanges, regulators, central banks, stockbrokers and clearing systems are working together on the African Exchanges Linkage Project (AELP), set to create trading and information links between the 7 leading securities exchanges.

Participating exchanges at the first capital markets stakeholders’ roundtable were the West African regional exchange Bourse Regionale Valeures Mobilieres (BRVM), Casablanca Stock Exchange, The Egyptian Exchange, Johannesburg Stock Exchange, Nairobi Securities Exchange, The Nigerian Stock Exchange and the Stock Exchange of Mauritius.

The linkage project is a joint initiative by African Development Bank and African Securities Exchanges Association. It aims to facilitate cross-border trading and settlement of securities, unlock pan-African investment flows, promote innovations and diverse investments, and address lack of depth and liquidity in Africa’s financial markets. For more background, see our recent article.

The project is backed by $980,000 grant through the African Development Bank Korea-Africa Economic Cooperation Trust Fund (KOAFEC).

Karim Hajji, ASEA President and chief executive of the Casablanca Stock Exchange, said according to the press release: “Regional integration is a high-priority continental agenda. By organically linking 7 exchanges in Africa which collectively have a market capitalization of over US$1.4 trillion, the AELP will stimulate intra-African flows and provide opportunities for investors and trading participants in over fourteen African countries.

“With the expected outcome of boosting liquidity in African capital markets, the AELP will unlock the powerful potential of African markets to access and redistribute domestic capital for economic development.”

Pierre Guislain, African Development Bank’s Vice-President, Private Sector, Infrastructure and Industrialization, said: “The partnership between us and ASEA complements the Bank’s interventions towards deep and resilient capital markets in Africa. The African Exchanges Linkage Project will contribute to a wider financing pool for African corporates and SMEs and help close Africa’s infrastructure deficit, estimated at US$67–107 billion annually. Indeed, the continent needs deep, liquid and linked capital markets that will enable accelerated mobilization of domestic resources and incentivize private financing of infrastructure”.

Participating partners at the workshop on 24 April at African Development Bank’s headquarters included:
• Regulators Le Conseil Régional de l’Epargne Publique et des Marchés Financiers, Autorité Marocaine du Marché des Capitaux, Securities and Exchanges Commission of Nigeria, and the Capital Markets Authority of Kenya.
• Central bank – Banque Centrale des Etats de l’Afrique de l’Ouest,
• Stockbrokers and exchanges associations – Association Professionnelle des Sociétés de Bourse, Association of Stockbroking Houses of Nigeria, Kenya Association of Stockbrokers and Investment Bankers
• Clearing systems – Association Professionnelle des Banques Teneurs de Compte Conservateurs, Maroclear, Central Securities Clearing System – Nigeria, Central Depository and Settlement Corporation Ltd. – Kenya
• Investment banking – Afrinvest West Africa.

Pierre Guislain of African Development Bank and Karim Hajji of African Securities Exchanges Association and Casablanca Stock Exchange

AFSIC conference – 2 weeks to go

AFSIC – Investing in Africa is in its 7th year and takes place in 2 weeks’ time.
Europe’s biggest annual conference on inward investment to Africa will be 8-10 May 2019 in London.

For registration go to the AFSIC conference website.

AFSIC is a highly focused investment event and one of the most important Africa investor events globally. Over 200 of Africa’s most important investors and business leaders are confirmed as speakers.

1000+ Expected to attend in 2019

Business leaders from around 40 African countries are expected to attend in 2019; over 250 speakers and participants in country-focused sessions; expected 1000+ delegates; 100 sessions dedicated to uncovering Africa’s most profitable investments; and dynamic networking events providing opportunities for African business leaders, investors and deal-makers to meet.

A sophisticated event and meeting app allows delegates to prepare up to a month ahead for critical investment meetings allowing real deals to be concluded during the course of AFSIC.

Many of Africa’s most important investment funds are confirmed as speakers including:

  • Jussi Ahonen, Investment Manager, Finnfund
  • Magdi Amin, Investment Partner, Omidyar Network
  • Diana Amoa, Portfolio Manager, JP Morgan Asset Management
  • Franklin Olakunle Amoo, Managing Partner, Baylis Emerging Markets LLC
  • George Asante, Head: Markets ex SA, CIB, Absa Bank
  • Souleymane Ba, Partner, Helios Investment Partners LLP
  • Christopher Balliet Bleziri, Principal Investment Officer, BOAD
  • Craig Batsi Bandason, Portfolio Manager, Imara Asset Management
  • Peter Bartlett, Partner, GML Capital LLP
  • George Bodo, Head of SSA Banking Research, Ecobank Capital
  • Ben Botes, Group CEO, SeedsLife Caban Impact Investment LLP
  • Chantelé Carrington, COO, Africa Business Group, PwC
  • Emilio Cattaneo, Executive Director, EAIF – Part of The Private Infrastructure Development Group
  • Anne-Marie Chidzero, Chief Investment Officer, FSD Africa Investments
  • Johann Choux, Head Of Equity Investments – Financial Institutions & Innovation, Proparco
  • Paul Clark, Portfolio Manager, Ashburton Investments
  • Grant Cullens, CEO Asset Management, African Alliance Asset Management
  • Edwin Dande, Chief Executive Officer, Cytonn Investments
  • Andreas Davidsen, Senior Investment Manager, Norfund
  • Jonathan De La Pasture, Portfolio Manager, Stanlib Credit Alternatives
  • Arnaud De Lavalette, Senior Project Manager, ADA Microfinance
  • James Doree, Managing Director, Lion’s Head Global Partners
  • Kunal Doshi, Investment Professional, Capricorn Investment Group
  • Steven Duchatelle, CEO, Advans Group
  • Olivier Edelman, Head of Unit, European Investment Bank
  • Karim El Hnot, CEO, Sogecapital Gestion
  • John Esther, NE AFRICA Coverage Executive, TDB
  • Michael Fabbroni, Head Financial Institutions Debt Financing – Africa, responsAbility Investments AG
  • Michael Fischer, Director – Financial Institutions Africa, DEG mbH
  • Wieger Fokke, Senior Investment Officer – Financial Institutions Africa, FMO – The Dutch development bank
  • Juan Jose Garcia, Principal and Regional Syndications Lead, Sub-Saharan Africa & Latin America, International Finance Corporation, IFC
  • Jarred Glansbeek, Chief Investment Officer, RisCura Holdings (Pty) Ltd
  • Cathy Goddard, CEO, Firebird Fund Managers
  • David Grayson, Chief Executive Officer, Auerbach Grayson & Company
  • Yann Groeger, Regional Manager Africa, BlueOrchard Finance
  • Sanjeev Gupta, Executive Director & Head of Financial Services, Africa Finance Corporation
  • Thomas Heinig, Senior Project Manager, KfW Development Bank
  • Ed Higenbottam, Managing Director, Verdant Capital
  • Steve Hollingworth, President, Grameen Foundation
  • Philip Hopkins, Director of Investments, Equator Capital Partners
  • Thomas Hougaard, Vice President, IFU – Investment Fund for Developing Countries
  • Nick Hughes, Co Founder and Chief Product Officer, M-KOPA LLC
  • Will Hunnam, Co-Founder, Orbitt
  • Ulla Huotari, Investment Manager, Finnfund
  • Jimoh Ibrahim, President Infastructural Development in Africa, Africa infrastructural Development Funding Dubai
  • Ioto Iotov, Manager, AfricInvest
  • Robert Jenkins, Senior Partner and Chief Investment Officer, Phatisa
  • Afsane Jetha, CEO & Managing Partner, Alta Semper Capital
  • Jarri Jung, Regional Manager Africa & Middle East, Triple Jump
  • Dr Jens Koeke, Chief Investment Officer, Allianz Africa
  • Laureen Kouassi-Olsson, Financial Institutions Head and West Africa Office Head, Amethis Finance
  • Jonathan Kruger, Portfolio Manager, Director, Adventis
  • Arun Kumar, Principal Investment Officer, African Development Bank Group
  • Brenton Lalu, Specialist: Africa, Public Investment Corporation
  • David Lashbrook, Head of Africa Real Estate, Momentum Africa Real Estate Fund
  • Gregoire Lecomte, Group Head of Investor Relations & Funding, Baobab Group
  • Peter Leger, Head of Global Frontier Markets, Coronation Fund Managers
  • Alexis Losseau, Investment Officer, BIO – Belgian Investment Company for Developing Countries
  • Steven Loubser, Fund Manager, Investec Asset Management
  • Albert Maasland, Group CEO, Crown Agents Bank
  • Johan Marnewick, Head of Credit Alternatives, Stanlib
  • Asha Mehta, Lead Portfolio Manager, Acadian Asset Management
  • Cédric Mezui, Coordinator of African Financial Markets Initiative, African Development Bank
  • The Rt Hon Penny Mordaunt MP, Secretary of State, Department for International Development
  • Kurt Morriesen, Senior Advisor of Impact Investments, UNDP
  • Hoda Atia Moustafa, Africa Regional Head, Multilateral Investment Guarantee Agency (MIGA)
  • Rufaro Mucheka, Head of Strategy & Rest of Africa, Nedbank Limited
  • Kaan Nazli, Senior Economist, Neuberger Berman
  • Nothando Ndebele, Head: Financial Institutional Group, Absa Bank
  • Erica Nell, Head of Credit, Sanlam Investment Management
  • Lexi Novitske, Principal Investment Officer, Singularity Investments
  • Temi Ofong, Head: CIB, Absa Bank
  • Adesuwa Okunbo, Partner & Managing Director, Syntaxis Capital Africa
  • Lanre Oloniniyi, Co-Founder, Orbitt
  • Ope Onibokun, Investment Specialist, Investec Asset Management
  • Yann Pambou, Head of Africa, Principal Investments and Private Equity, Swiss Re direct Investment Ltd
  • Lasitha Perera, CEO, GuarantCo – Part of The Private Infrastructure Development Group
  • James Polan, Vice President, Small & Medium Enterprise Finance, Overseas Private Investment Corporation
  • Martijn Proos, Director, Investec Asset Management
  • Brandon Quinn, Co-Founder and CEO, Saffron Wealth
  • Charles Robertson, Global Chief Economist, Renaissance Capital
  • Erik Sandersen, Executive Vice President – Financial Institutions, Norfund
  • Robert Schofield, Head of Division, European Investment Bank
  • Andrew Schultz, Head of Africa Sales, Investec
  • Nimit Shah, Partner, Helios Investment Partners
  • Frank Streppel, Global Head of Investments, Emerging Markets Department, Triodos Investment Management B.V.
  • Jean-Philippe Syed, Principal, DPI – Development Partners International
  • Wasim Tahir, Sector Strategist – Financial Institutions, CDC Group
  • Roland Tatnall, Senior Investment Director, Mubadala Infrastructure Partners
  • Ameya Upadhyay, Principal, Investments, Omidyar Network
  • Antti Urvas, Associate Director Financial Institutions, Finnfund
  • Cobus Visagie, Group CEO, Africa Merchant Capital
  • Emma Wade-Smith, Her Majesty’s Trade Commissioner for Africa, Department for International Trade
  • David Webb, Managing Partner & CIO, Emerging Markets Development Partners
  • Graham Wrigley, Chairman, CDC Group