Archive for the 'Other Countries' Category

MTC rings up Namibia’s biggest IPO, coming this month

IPO ALERT – Namibia is gearing up for its biggest initial public offering (IPO) when Government sells 49% of the leading telecommunications company MTC Namibia. The IPO prospectus is set to be published on 20 September and the share offer will open the same day and is likely to close at 12 noon local time on 1 November. The aim is to complete the listing on the Namibian Stock Exchange (NSX) before the end of November 2021.

Government has budgeted to raise N$1.5bn from the listing ($90m) but the number could be much higher.

The share offer will be open for domestic and international investors. Namibia Post and Telecommunications Holdings Limited (NPTH), which is a 100% state-owned enterprise (SOE), will retain 51% of the shares. The listing prospectus was registered by Namibia’s Registrar of Companies on 19 August.

According to MTC’s annual report for the year to September 2020, revenues were N$2.68bn (USD $160.7m), up 2.7% on the previous year, and earnings before interest, tax, depreciation and amortization (EBITDA) of N$1.4bn were up 3.8% “despite listing costs and the impact of (International Financial Reporting Standard) IFRS 16”.

However net profit after tax (NPAT) was down 3.8% to N$772m ($46.2m) “due to higher depreciation due to capital expenditure over the past three years”. Revenues were up due to “2% growth in active customer numbers and 22% growth in data revenue” including because of working from home. Blended average revenue per user (ARPU), excluding handset revenue, was N$87.50 ($5.24).

Nearly N$1bn in dividends

MTC paid dividends of N$977.8m for the year, including a special dividend of N$400m in December 2019. The rest of the dividend, at N$577.8m, is up strongly from N$413m (2019) and N$374m (2018).

MTC has 91% share of the Namibian market with 2.58m (up by 2.1%) subscribers. Mobile network covers 97% of the population in the large country, with 100% planned by 2023, and mobile broadband covers 87%. MTC was first established by Swedfund and Telia with NPTH and in 2004 they sold their shareholdings to NPTH. Portugal Telecom invested in 2006 and sold the shares back to NPTH after 2016.

“We take great pleasure to invite you to share in the prosperity by subscribing for shares in this truly Namibian company. The listing will provide an opportunity for all MTC customers, staff, stakeholders, and the public in general, to acquire MTC shares and participate in the ownership of MTC,” said the MTC statement.

How to invest

If the public offer is oversubscribed the order of the allocation process will be first to previously disadvantaged Namibians, then to MTC staff and customers, followed by Namibian natural persons and corporates, and finally to Namibian institutions and SADC and international investors.

Shareholding applications for the general public will be made available online on the MTC website from 20 September 2021 at 9:00, or by collecting a prospectus, and completing and submitting an application form at any mobile home, selected Nampost outlets or a stockbroker.

According to news reports, the Government Institutions Pension Fund (GIPF) will be allotted 20% stake and MTC’s 670 staff are expected to be allocated shares under an employee benefit scheme.

The listing was initially due in in March 2020 but was delayed due to the COVID-19 pandemic and in order to achieve good value for the Government owner. MTC appointed IJG Securities and PSG Wealth Management (Namibia) as Sponsoring Brokers.

Comment – Many people have called on African governments to sell parts of their SOEs and list them on the stock exchange, to give more avenues for domestic savings and to deepen capital markets while raising funds to cut debt or spend on infrastructure. CONGRATULATIONS TO THE NAMIBIAN GOVERNMENT, THE NSX AND ALL AT MTC NAMIBIA ON ACHIEVING THIS MILESTONE!

LEI global identity to boost trade for African SMEs

Photo: by Copperwares Zimbabwe

The global initiative to give business entities worldwide a Legal Entity Identifier (LEI) is to roll out for African small and medium enterprises through innovative collaboration including the London Stock Exchange and a Zimbabwean bank.

The LEI provides globally recognized business identities to SMEs. In innovative partnership Zimbabwe’s NMB Bank will act as the first Validation Agent in Africa, using the bank’s usual onboarding process for business clients, including  “know your client” (KYC) and “anti money laundering” (AML) checks, to very businesses identities and ownership information. This should help SMEs access more favourable trade terms on international transactions and improve their access to finance.

Second Muguyo, Finance and Admin Manager at Copperwares, a Zimbabwean copper and silver giftware manufacturer is quoted in a story on Mondovisione website: “We face trade financing challenges not only because we are a small company, but because we are unknown from Zimbabwe. While we are not directly excluded from trade finance, we often receive unfavourable repayment terms which result in indirect exclusion. The LEI, as a globally recognized form of business ID, will give us greater credibility when we apply for finance, engage in international trade and establish new supplier relationships for our manufacturing process.”

Partners in the LEI initiative are:

The aim of supplying LEIs to African SMEs is to boost financial inclusion by helping them apply for trade finance and establish contractual, regulated agreements with banks, payment networks and trading partners. This should mean broader access to financial services and greater participation in both domestic and international markets as well as increasing the flow of inbound capital to fuel Africa’s economic development.

Stephan Wolf, CEO of GLEIF is quoted: “The LEI has the potential to create a more transparent, efficient cross-border exchange of goods and data under the African Continental Free Trade Area. This is the first step toward greater financial inclusion and overcoming the challenges associated with access to trade finance in Africa. Considering the high pace of digitization and regulatory development across the African continent, the LEI is a great natural fit. It is a compelling, ready-to-go cross-border solution for entity identification that is open, reliable and easily integrated into regulatory frameworks.”

GLEIF is keen to hear from governments, non-governmental organizations, banks and other stakeholders interested in expanding the LEI initiative in Africa or replicating the model in other developing economies. Email info@gleif.org for more information.

Alberta Abbey, LEI Analyst, Data & Analytics, LSEG: “LSEG joined this initiative to facilitate wider LEI adoption across Africa. By demonstrating the uses and benefits of Legal Entity Identifiers, our aim is that this project will encourage more entities across Africa to obtain LEIs. We started the project with a partnership approach, which we intend to continue beyond the pilot.”

Barry Cooper, Technical Director, Cenfri: “The LEI is one of the few initiatives with real potential to meaningfully address the challenges of de-risking in developing markets. The high costs of institutional due diligence and information asymmetries is a core element of the exclusion of small and medium enterprises, and even some corporates, from regional and international markets. A robust global enterprise identity opens up an under-represented large base of SMEs and women-owned businesses to trade across Africa as well as across the global markets. Cenfri looks forward to the deepening of LEI usage across Africa and the inclusion of SME and women-owned enterprises in the global economy.”

Photo: by Copperwares Zimbabwe

Read more:

  1. Making Finance Work for Africa: “Promoting the Legal Entity Identifier to foster transparency and trade in African markets” (article by Hugues Kamewe Tsafack and Sarah Weiss, 17 Jan 2021)
  2. Validation Agent Framework – a new operational model in the Global LEI System, which allows financial institutions to obtain and maintain LEIs for their clients in cooperation with accredited LEI issuer organizations.

3 East African exchanges to link before year-end 2020

Market integration across 3 East African securities exchanges is moving fast with a target of being live and online by 31 December 2020. According to a news report, Uganda Securities Exchange, Dar es Salaam Stock Exchange and Rwanda Stock Exchange are set to start trading as a single market after connecting their trading systems to each other and hooking to the EAC Capital Markets Infrastructure (CMI) Information Technology platform.

The Pakistan-based InfoTech Group is been contracted to provide the software connecting the trading platforms of the U to enable them to run as a single market in real time. A news release from 2018 says ” InfoTech was selected to deploy its Capital Market suite, Capizar ATS, along with a Smart Order Routing system. This would achieve a single market for both central banks and capital markets and will stimulate intra-regional securities trade and investment.”

According to the report in East African “They can operate as a single market with a view of reducing the cost and time of trading in shares of companies listed on markets across the borders. Investors in the 3 countries will buy and sell shares of companies listed in any of the countries without going through different stockbrokers.”

 

World Bank project

The World Bank has committed $26.18 million for a 9-year Financial Sector Development and Regionalisation Project (EAC-FSRDP) 1. It supports financial sector integration among the East African Community (EAC) member States and was planned to as part of preparations for bringing in a single currency across the EAC, although the 2024 deadline for this is now being reviewed.

The World Bank project finishes on 31 December after the EAC Secretariat requested a 6-month extension for activities whose implementation was disrupted by Covid-19 pandemic. According to the World Bank website, $16m was the initial commitment, topped up with $10.5m in September 2016, and $24.7m has been disbursed as of September 2020.

The World Bank project has 6 components:

  1. Financial inclusion and strengthening of market participants ($4.3m)
  2. Harmonization of financial laws and regulations ($4.23m)
  3. Mutual recognition of supervisory agencies ($0.7m)
  4. Integration of market infrastructure ($3.75m)
  5. Development of regional bond market institution building ($12.1m)
  6. Project Management ($1.1m).

Missing Nairobi Securities Exchange

According to the report, the region’s biggest exchange, the Nairobi Securities Exchange, pulled out of the project in 2015 after expressing dissatisfaction on how the Pakistan firm was awarded the contracting citing procurement irregularities.

Geoffrey Odundo, chief executive of the NSE, was quoted: “We have not yet reconsidered our position in terms of our participation in this project but we have had a discussion with EASEA in terms of the progress of the project and how far they are. They mentioned to us that they have set the infrastructure and they are ready to go.

“They are supposed to share with us some information including the efficiency and the expected outcomes of the project for us to be able to make a proper assessment of the current status of the project before we can make any further decisions. But right now we have not made any decision to go back to the project.

According to the news report, the market capitalization of the NSE was $22.1 billion in June compared with $6.5bn on DSE, $5.1bn on USE and $3.5bn for RSE.

Ready in September

Celestin Rwabukumba, the chairman of The East Africa Securities Exchange Association (EASEA) and CEO of Rwanda Stock Exchange CEO is quoted by The EastAfrican reporter James Anyanzwa: “We are doing the final testing on our system for the CMI project. We are ready psychologically and technically we are working on those technicalities that are remaining. On the other hand Tanzania and Uganda are technically ready,”

“Everything should be ready by the end of this month and then we agree on the time of the launch because 95% of the work has been done. The launch cannot go beyond December because we cannot afford to go beyond that time.”

The report said the project has taken more than 5 years due to a payment dispute with the software provider and lack of integration between CMI software and the trading systems of the participating Uganda Securities Exchange, Dar Es Salaam Stock Exchange and Rwanda Stock Exchange.

AELP is different

The EAC market integration is separate from the African Exchanges Linkage Project, a joint initiative of the African Securities Exchanges Association (ASEA) and the African Development Bank (AfDB). The initial phase is promoting cross-border trading and liquidity in 7 stock markets with a combined market capitalisation of $1.0 trillion.

These exchanges are: Bourse Régionale des Valeurs Mobilières (BRVM – Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo), Casablanca Stock Exchange (Morocco), The Egyptian Exchange (Egypt), Johannesburg Stock Exchange (South Africa), Nairobi Securities Exchange (Kenya), the Nigerian Stock Exchange (Nigeria) and Stock Exchange of Mauritius (Mauritius).

In March 2019, ASEA received a grant of $980,000 from the Korea-Africa Economic Cooperation (KOAFEC) trust fund via AfDB to facilitate implementation of the project.

CIMERWA cement is Rwanda’s 10th listing

CIMERWA, the only integrated cement producer in Rwanda, is also helping build the capital market by providing the tenth listing on the Rwanda Stock Exchange. It listed by introduction on 3 August, without a public share offer, however, the shareholders of 49% of its 703.2m shares will make them available for buying by the public to form a “free float”.

The shares are offered at RWF120 (12.67 US cents) each, according to an article on Rwanda’s KT Press website, giving a total value (market capitalization) of RWF84.4bn ($87.3m). The shares offered for buyers and traders are owned by:

  • AGDF Corporate Trust on behalf of the Government of Rwanda (16% of the total)
  • Rwanda Social Security Board (RSSB – 20%)
  • Rwanda Investment Group (RIG – 11%)
  • Sonarwa Holdings Ltd.

CIMERWA is also creating an employee stock ownership plan (ESOP).

CIMERWA is 51% owned by South Africa’s Pretoria Portland Cement. It has a production plant in Bugarama, in south-western Rwanda, with capacity to produce 600,000 tonnes per year but currently producing at up to 80% of capacity (480,000 tonnes). Prospects are good as Government of Rwanda steps up construction, including plans by the Ministry of Education to build 22,500 school classrooms by September, in a programme partly financed by the World Bank.

in the year to September 2019 it had revenues of $64.4m and net income of $3.5m, according to the prospectus. It has enjoyed revenue growth of 40% a year and has been profitable since 2016 with 31% EBITDA margin (a measure of cash generated by operations compared to turnover) and 64% gross profit growth.

Albert Sigei, CIMERWA CEO  since May, said: “We have been part and parcel of Rwanda’s growth story with contribution to the society on many fronts. This will be an opportunity for investors to gain exposure into the attractive cement industry with solid growth potential.”

CIMERWA was established in 1984 as Ciments dur Rwanda as a government parastatal in a cooperation project with China. It was privatized in 2007 with RSSB taking 37%, Government 30% and RIG 21% and other investors the rest. In April 2020 it became a private company and PPC International Holdings had 51%.

CIMERWA chairman Regis Rugemanshuro added: “This transaction will create opportunities for the private investors, and the government will become a neutral player in a sector whose potential is yet to be fully exploited. There could not be a better avenue of achieving this objective than listing at the RSE. With Rwanda having about 57kg per capita cement consumption annually, we have just but only scratched the surface on the huge long-term potential in the cement industry.”

Clare Akamanzi, chief executive of Rwanda Development Board, said: “If you look at Rwanda’s economic recovery plan, we expect CIMERWA to play a big role both in terms of building the economy through the indirect contribution but also directly contributing to the rebuilding and reconstruction of our economy post Covid-19.”

Demand for cement is estimated at 700,000 tonnes a year and there is considerable urbanisation as well as other big government projects such as Bugesera International Airport, model villages and transport projects. Although Rwanda’s economy is only expected to grow by 2% in 2020, due to the health pandemic, stronger growth of 6.3% is forecast for 2021 and 8% for 2022.

It is the fifth local company on the Rwanda bourse. South African health investor RH Bophelo was the ninth listing on 1 June.

However, trading in shares on the exchange for the first six months of 2020 was just under $400,000, down 85% compared to $2.6m in the six months to June 2019, according to an article in Rwanda’s New Times, particularly as trading slowed dramatically once the health crisis hit in March. Trading in bonds more than doubled, from $6.2m to $12.7m.

Africa’s top telco towers firm seeks $7bn US listing

A telecoms firm launched in Lagos is set to be Africa’s biggest listing in the United States with a suggested $7bn valuation. IHS Holding Ltd, which operates up to 28,000 wireless telcoms towers across nine countries, announced plans to go ahead with a potential initial public offering (IPO) of shares to investors in a press release on 14 August. It said the listing would start after a review by the US Securities and Exchange Commission (SEC), but gave no more details.

It is Africa’s largest mobile infrastructure provider and third largest independent multinational tower company in the world. It could be seeking to raise up to $1bn in New York.

In February, before the COVID-19 crisis hit markets, news agency Bloomberg gave the estimated valuation for IHS, which is based in Mauritius, and reported it had hired Citigroup Inc and JP Morgan Chase & Co as global coordinators for a listing. The preference was for New York as other world-leading telco tower firms are also listed in the US and have higher valuations compared to those in London. In 2018 the firm had delayed plans for a listing until after Nigeria’s Presidential election as Nigeria is still its main market.

Group CEO is US entrepreneur Sam Darwish, originally from Lebanon, was working in Nigeria with the first mobile (GSM) operator there. He founded IHS in 2001, with IHS Chief Operating Officer William Saad when the Government announced plans to privatize telecoms. The group builds or buys towers and leases space to mobile network operators (MNOs) who in turn provide wireless voice or data to customers, and it manages sites for MNOs. It is active in Nigeria, Cameroon, Côte d’Ivoire, Zambia and Rwanda with some 24,000 towers.

Earlier in 2020, IHS finalized the acquisition of some 1,600 telecom towers in Kuwait from Zain and of Brazil’s Cell Site Solutions (Cessão De Infraestruturas S.A., CSS) which has some 2,300 towers and telecom infrastructure sites in Brazil, Peru and Colombia.

Shareholders include the French private equity investor Wendel Group, which has a 21.3% stake, Goldman Sachs, MTN Group Ltd, previously reported with a 29% stake, and many other leading investors including International Finance Corporation and Emerging Capital Partners. Wendel is a listed long-term capital investor in a group launched by Jean-Martin de Wendel in 1704.

As it expanded, IHS has raised $5.5bn in equity from its shareholders and debt over the years, including $1.3bn in debt in 2019.

Zambia Forest lists on Lusaka Securities Exchange

Zambia Forestry and Forest Industries Corporation PLC today (12 February) brought welcome relief to the Lusaka Securities Exchange when it broke a 6-year listing drought. The listing was for the full 400 million shares, after an offer of 160m shares (40%) at ZMW2.06 each to raise ZMW330m ($22.5m). The forestry firm will use the proceeds from selling 70m of these shares for working capital, expenses and capital spending.

Zaffico is the biggest company in establishing, managing and selling exotic roundwood in Zambia and manages 51,659 hectares in pine and eucalyptus plantations plus some 50,000 hectares of unplanted land. It sells mature trees harvested as well as poles for transmission, fencing and construction.

According to the prospectus, dated 6 December, the total share offer included a sale of 90m shares from Zambia’s state-owned Industrial Development Corporation (IDC). The offer opened on 11 December. The sponsoring broker is Pangaea Securities. It was the LuSE’s first public offer and listing in 6 years since Madison Financial Services in mid-2014. The share offer was extended by 8 days but closed on 29 January.

In the financial year 2018, Zaffico’s revenue was ZMW244.7m (up from ZMW208.2m in 2017), earnings before interest, tax, depreciation and amortization (EBITDA) was ZMW163.5m (ZMW148.2m) and net profit was ZMW119.6m (ZMW114.5m). Zaffico has also been authorized to sell confiscated rosewood mukula logs and logs harvested before harvesting mukula was banned. In August 2019 it was reported that the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) had decided to include mukula trees in its Annex II listing. Rosewood has a high value in China for making furniture and is being widely harvested across Africa while Zambia has imposed bans and lifted them from time to time (Lusaka Times estimates that some $2bn of mukula revenue was stolen by a cartel).

Seychelles MERJ Exchange IPO closes 28 Feb

The MERJ Exchange, the national securities exchange of Seychelles, has extended its $4 million initial public offer (IPO) to 28 February in the form of tokenized shares. The exchange already listed the tokens on itself by introduction on 7 August 2019 and opened the IPO on 10 September.

The exchange, previously known as Trop-X, says it is the world’s first fully regulated exchange that can handle both securities and digital assets, has a fully regulated post-trade processing infrastructure and works with a central clearing model. It operates a stock exchange for equities, debt and derivatives and says it will be first global market to offer the full cycle in primary and secondary markets in digital assets.

At the time of issuing the prospectus (27 August 2019) the bourse had 31 listed equities and 2 debt issues with market capitalization of $382.7 million. There were 3 members and 5 listing sponsors.

The MERJ Exchange shares are tokenized into digital assets. The offer is for tokens representing 1,652,893 securities at $2.42 per share, to be traded in USD. This will be 16% of the total shares if issued in full giving a valuation of $25m for the exchange. The minimum raise for the IPO to go ahead will be $500,000, the minimum subscription per investor is $2,000 (826 shares) and $10,000 (4,132 shares) from within the USA.

MERJ Exchanges plans to spend the offer proceeds on IT advisors and consultants, increasing its staff and marketing.

The total share capital is 15 million ordinary shares with a par value of $0.03 each. This has been tokenized to 8,684,207 tokenized shares which are currently listed.

It is starting to attract international partners including Jumpstart Securities in the US and Globacap in UK for the offer. The sponsor advisor for the offer is PKF Capital Markets (Seychelles) Ltd.

According to the investment deck (available here), it has big plans to increase the number of issuers from the current 33 to 111 by the end of year 2, boost the total market capitalization (already $1 billion according to a January 2020 newsletter) and increase the number of sponsors and brokers, as well as liquidity. It will cut trading fees from current 0.5% to 0.15% and have a capital raise fee of 0.3%.

MERJ aims to position itself as a key regulated system as blockchain technology transforms the way the world delivers value, including tokenization of illiquid assets including real estate, shares in small and medium enterprises (SMEs), copyrights and collectables such as art. It hopes to take on global incumbent exchanges which have legacy structures and stakeholders that are not yet ready to tackle the change.

From MERJ Exchange investment deck

The exchange was incorporated in 2011 as Trop-X (Seychelles) Ltd, received its licence to operate the Seychelles Securities Exchange in June 2012 and went live in August 2013 with the first equity listing. It became the national numbering agency and launching debt and derivatives exchanges in 2014. It listed its first Eurobond in 2016 and started working on the digital asset project with the Ethereum Alliance. It changed name in December 2018 and did its first tokenized listing, of its own shares, on 7 August 2019. Operational partners include Euroclear and Strate in its partners.

Ed Tuohy, CEO of MERJ Exchange, says in the investment deck: “MERJ has spent years establishing the infrastructure, the regulatory licences and the technology. We can now move decisively.”

According to the deck: “MERJ enjoys a number of key structural and organisational advantages which put us firmly ahead of the competition. These are: vertical integration, regulatory approval, agile organization, respected jurisdiction, live and operational, direct access platform.” The structure is MERJ Exchange Ltd and 2 wholly owned subsidiaries, MERJ Clearing and Settlement Ltd and MERJ Depositary and Registry Ltd.

The regulator Financial Services Authority Seychelles is an associate member of the International Organisation of Securities Commissions (IOSCO) and meets similar regulatory standards as all global regulators. MERJ is an affiliate member of the World Federation of Exchanges (WFE).

Seychelles is not listed on tax avoidance blacklists but is on the grey list of the European Union (with 31 countries including Namibia and Botswana) and Oxfam. By comparison Mauritius was removed from all EU lists in October 2019 but remains on the Oxfam grey list.

The Seychelles regulatory structure allows MERJ to integrate overseas organizations that are licensed and regulated in a recognized jurisdiction and there is no requirement that members have a presence in Seychelles.
It aims to provide seamless direct access for individual users using mobile and web apps.

For more information and to apply for the offer look at the MERJ Exchange website or the offer page on Globacap and US investors should speak to their broker.

NOTE: This article does not constitute investment advice, the purpose is news information. The writer is not affiliated to MERJ Exchange. Read the full prospectus, available here.

Helios Towers raised $364m in London IPO

Mobile telephone infrastructure company Helios Towers raised $364 million and listed on the London Stock Exchange yesterday 15 October. The stock HTWS launched at the bottom of the target price range at 115p and traded in a range of 115.00 – 126.98 over the day. Excluding the “greenshoe” extension the offer raised $318m, according to the London Stock Exchange (LSE).

Gokul Mani, Head of Primary Markets – Middle East, Africa & India, LSE, said in an email: “London Stock Exchange continues to be a strong partner to companies across the Middle East and Africa. Four of the five largest IPOs from the region this year have listed on our market. London’s capital markets offer deep liquid pools of capital, connecting issuers from the Middle East and Africa with long-term international investors, supporting dynamic companies, infrastructure development, and economic growth in the region. ”

In total, 124 companies from the Middle East and Africa (MEA) region are listed in London and have raised over $35 billion in equity issues. There are also 242 active MEA bond issuers who raised nearly $143bn. Of the top 10 initial public offers (IPOs) on the LSE in 2019, 4 are from MEA region. According to a Bloomberg report; “The London market is particularly quiet and Helios is one of several African and Middle Eastern companies that are helping to keep it alive.”

The share offer allowed shareholders including Millicom International Cellular SA and Bharti Airtel Ltd. to sell down their stakes. It was founded in 2009 with $350m backing by London-founded private equity firm Helios Investments alongside investors including George Soros and Madeline Albright, according to this report on Quartz .

Helios has more than 6,800 mobile telecommunications towers spread across five African countries (South Africa, Democratic Republic of Congo, Ghana, Republic of Congo and Tanzania) which it rents to mobile phone providers such as Vodacom, MTN and Airtel. It plans to use some of the IPO proceeds to keep pace with fast-growing consumption of mobile data in Africa, expand into new markets, build more towers and roll out fourth-generation (4G) mobile services. We wrote about the IPO here.

Another major mobile operator IHS Towers is raising $1.3bn via debt markets with 2 issues closing next week, according to Bloomberg, while American Tower Corp is buying a third provider, Eaton Towers Ltd. for $1.85bn.

Quartz cites Matthew Edwards, head of research for the region at research firm TowerXchange, there are 158,000 towers in Africa and “towercos” own 39.3%. There are expected to be more than 600m subscribers to mobile phones by 2025.

Towers can bring revenues to rural communities and land-owners. According to Quartz “As part of efforts to cut down costs, towercos are increasingly investing in hybrid power solutions like lithum-ion batteries and solar power. There’s a net upside for local communities housing towers given the possibility of reduced diesel consumption for generators and an accompanying reduction in emissions and pollution.”

This distinguishes Helios Towers, according to this LSEG backgrounder: “One thing that differentiates Helios Towers Africa from some of its competitors is that every site it operates also contains a mini power station. ‘This provides our customers with the uninterrupted power needed for mobile networks,’ explains Kash (CEO Kash Pandya), who is optimistic about the company’s prospects for the future. ‘It’s an exciting time to be in telecoms in Africa and a very exciting time to be in towers too.’”

$1.8bn Helios Towers closing London IPO on 14 Oct

Heliso Towers raising in London for Africa expansion and 5G

Africa’s next mega-listing on the London Stock Exchange is an African company that operates 7,000 towers in the mobile telecommunications sector that continues to show strong growth. According a a recent report on Reuters, Helios Towers Ltd has priced its initial public offering (IPO) at 115-145 pence per share on 2 October, implying a total valuation of $1.42 billion to $1.79bn.

According to the report, the deal close books on 14 October and first day of trading is expected on 15 October. Bank of America/ Merrill Lynch International, Jefferies and Standard Bank are joint global coordinators while Renaissance Capital and EFG Hermes are joint bookrunners. Helios is planning a free float of about 25% of its shares.

The pricing is down from earlier suggestions of up to £2bn ($2.47bn), including in the Financial Times, when the listing was first announced on 12 September. There have been several global listings this year including e-commerce company Jumia in New York, telco Airtel Africa and payment provider Network International in London. Recently the share prices of both Airtel and Jumia have been weak.

Reuters quotes one source familiar with the Helios deal: “It’s a really good business in a strong sector, telecoms in Africa is the sort of growth story that appeals in this low-growth environment (globally)”.

According to Kash Pandya, CEO of Helios Towers, in a report on website Total Telecom: “The Sub-Saharan Africa telecommunications market is and will continue to be one of the most exciting and high growth in the world. The underlying demographic and macro-economic trends are compelling: a young, growing and increasingly urbanized population whose demand for high-quality mobile voice and data services continues unabated, which is being further fuelled by expansion of 3G and 4G services and one day 5G services; and GDP growth that across our markets is expected to be 4.5%. per annum to 2024.”

Helios rents towers in 5 countries to telecommunications companies such as Airtel, MTN, Orange, Tigo and Vodacom. It has entered the competitive South African market, operates in Republic of Congo and Ghana, and is the only provider of towers in Democratic Republic of Congo and Tanzania. It reached earnings before interest, depreciation, taxes and amortization (EBIDTA) of $201m at the end of the second quarter of 2019, after 18 consecutive quarters of growth in adjusted EBIDTA.

It aims to raise $125m by issuing new shares in an initial public offer (IPO) and to use the money to expand, including into other fast-growing markets such as Senegal and Morocco and potentially into Angola and Ethiopia. The offer would also allow shareholders, including the International Finance Corporation and telecommunications firms Millicom and Bharti Airtel, to sell some of their shares.

Helios was founded in 2009 and is incorporated in Mauritius, although it will set up a holding company in London chaired by Ghanaian businessman Samuel Jonah.

Market conditions in 2018 caused both Helios and Eaton Towers, another telecoms company, to cancel plans to list internationally. Eaton Towers, slightly smaller than Helios Towers, was sold to American Tower in May in a deal which gave it an enterprise value of $1.85bn, according to the FT.

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.