JPMorgan Chase & Co is having one of its busiest years yet for African companies looking to trade their shares in both London and local equity markets such as the Johannesburg Stock Exchange.<\/p>\n
The New York-based investment bank has seen interest from at least six companies considering dual listings, said Barry Meyers, the head of JPMorgan\u2019s UK capital markets and sub-Saharan Africa business.<\/p>\n
The queries come amid a $2.7 billion share sale by Vivo Energy Plc last month in London\u2019s largest initial public offering this year, with the stock of the pan-African seller of fuels and lubricants also trading in Johannesburg.<\/p>\n
\u201cThe market wants high-growth, and it\u2019s hard to get that at the moment in the UK and Europe,\u201d spurring increased investor demand for assets in South Africa and the rest of the continent,” Meyers said by phone.<\/p>\n
\u201cThat\u2019s why these emerging-market deals are becoming more prevalent. Dual listings could become a bit of a trend.\u201d<\/p>\n
JPMorgan joins Citigroup Inc and Deutsche Bank AG seeing a bigger pipeline of deals as economies across the region stabilize from a drop in commodity prices and growth picks up.<\/p>\n
South Africa, the continent\u2019s most developed market, is also seeing a rebound in investor confidence after Cyril Ramaphosa succeeded Jacob Zuma as head of the ruling African National Congress in December and as president in the middle of February.<\/p>\n
High Expectations<\/strong><\/p>\n The second half will have to see a bumper haul of deals if that optimism is to be met.<\/p>\n Equity-linked transactions across sub-Saharan Africa total $3.2 billion so far this year compared with $6.3 billion in the same period in 2017, a record year for deals, according to data compiled by Bloomberg.<\/p>\n Consol Holdings Ltd.\\, a South African glass-packing maker, in April pulled its IPO, citing weak demand, while the nation\u2019s economy shrank more than expected in the first quarter.<\/p>\n In March, Helios Towers Plc abandoned plans for an IPO, with Mergermarket reporting that it could merge with another telecommunications tower operator in Africa, Eaton Towers Ltd.<\/p>\n More to Come<\/strong><\/p>\n JPMorgan has advised on two major deals this year aside from the Vivo transaction; the IPO of Libstar Holdings Ltd, a Johannesburg-based food producer that issued stock at the bottom of its price range, and a share sale in which Cape Town-based insurer Sanlam Ltd raised almost R6 billion ($473 million).<\/p>\n Dangote Cement Plc, the Nigerian cement producer owned by Africa\u2019s richest man is considering a share sale in London in the next two years, Bloomberg News reported in April.<\/p>\n Bharti Airtel Ltd is weighing the sale of a quarter of the equity in its African unit by early 2019, people familiar with that transaction told Bloomberg last month.<\/p>\n \u201cThere will be more\u201d IPOs like Vivo, Meyers said. Some real-estate companies with pan-African operations had recently come to see JPMorgan, he said, declining to be more specific or to identify any of the firms.<\/p>\n Here are some more insights from Meyer:<\/p>\n \u201cAfrica looks like a very viable growth alternative to Russia, Turkey and China.<\/p>\n \u201cInvestors are very interested in Africa and South Africa at the moment. There is a lot of international flow coming back into South Africa. When we did the Sanlam deal in March this year, we saw a lot of international interest, which not unexpected.\u201d<\/p>\n On IPOs:<\/p>\n \u201cThe IPO market is extremely busy this year, busier than any other year. However, investors are now being more selective in what they choose to invest their money in. More than half of the deals have been emerging-market deals.<\/p>\n \u201cIt\u2019s an IPO market of winners and losers. Companies need to capture the market\u2019s attention to draw the money.<\/p>\n \u201cFor these African-London IPOs to work you need to be best in class, and it needs to be quite big as well and have a track record.<\/p>\n \u201cCompanies shouldn\u2019t be over leveraged because of perceived geographical risks, but more importantly need to spend their money on growth. Investors want diversification. If you want to get the bigger global investors, being bigger also does help.\u201d<\/p>\n
\n