{"id":521892,"date":"2021-09-16T09:31:19","date_gmt":"2021-09-16T07:31:19","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=521892"},"modified":"2021-09-16T09:31:19","modified_gmt":"2021-09-16T07:31:19","slug":"why-fewer-companies-are-listing-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/521892\/why-fewer-companies-are-listing-in-south-africa\/","title":{"rendered":"Why fewer companies are listing in South Africa"},"content":{"rendered":"

A global surge in initial public offerings has so far eluded sub-Saharan Africa.<\/p>\n

Companies have raised a record $467 billion on the world\u2019s stock exchanges during the first eight months of this year, according to data compiled by Bloomberg. Yet in Johannesburg, home of Africa\u2019s largest bourse, 21 companies have instead de-listed in 2021. Smaller exchanges in Accra, Nairobi and Lagos have been similarly quiet.<\/p>\n

The world\u2019s highest unemployment rate and a\u00a0lack of confidence\u00a0in South Africa\u2019s economic recovery are pushing companies toward more affordable funding sources.<\/p>\n

Firms in the continent\u2019s most industrialized nation, especially smaller businesses, have been finding it easier and cheaper to raise debt to fund growth than issue shares, Mate Munalula, co-head of markets for Citigroup in the country, said an interview.<\/p>\n

\u201cBeing listed can be perceived as more onerous, procedural and administrative when running a small entity,\u201d he said.<\/p>\n

Another reason is that technology and digital startups in the country are in short supply, yet that sector has accounted for a major part of the global IPO rush. Chinese ride-hailing giant Didi Global raised $4.4 billion in the US in June, while KakaoBank, South Korea\u2019s first internet-only lender to go public, sold $2.2 billion\u00a0of stock and soared more than 70% in its trading debut.<\/p>\n

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South Africa has two fast-growing tech firms in branchless lender TymeBank, backed by billionaire Patrice Motsepe, and payments company Yoco, but both have sourced cash outside the equity-capital markets. TymeBank raised $109 million in February, at a valuation of R8 billion ($530 million). Yoco attracted $83 million in July.<\/p>\n

In Nigeria, fintech companies are emerging on the radar of high-profile investors. But US firm Stripe agreed to pay $200 million to buy out Lagos-based Paystack, and Flutterwave said it would look to New York as a potential IPO destination.<\/p>\n

Wireless carriers MTN Group and Airtel Africa have indicated a willingness to spin off fast-growing fintech or mobile-money arms, valuing them at billions of dollars. Though in both cases an IPO could be years away.<\/p>\n

“When you look at disruptors that are listing to attract capital, in South Africa we\u2019ve been quite a laggard,” said Kyle Wales, portfolio manager at Flagship Asset Management. “E-commerce penetration in South Africa is 3%. In China the same ratio is 25%.”<\/p>\n

Three firms that opted out<\/strong><\/p>\n