The London Stock Exchange (LSE) has intimated it plans to increase the number of African companies publicly listed in the UK, prompted by overwhelmingly positive reaction from institutional investors to a spate of recent IPOs from the continent.
The UK exchange operator is already working on new agreements with exchanges in Nigeria, Kenya, Egypt and Morocco to attract African blue-chip companies to list in London, in an effort to replicate the success of dual London-Johannesburg listings in recent months.
In an interview with the Financial Times, the LSE’s co-head of emerging markets, Ibukun Adebayo, reports that the exchange operator is targeting ‘indigenous companies’ from Africa, particularly those in the consumer goods and financial sectors. ‘There is a big push for Africa, particularly creating a partnership with local exchanges,’ he says. ‘We are working to bring collaboration with local markets.’
The newspaper notes that, in the past five years, 55 African companies have listed in London, while only 33 made the jump in the previous five years. Most recently Bidvest, one of South Africa’s largest conglomerates, looked into listing its foods services business in London to fund further growth, while in April, Nigerian oil and gas company Seplat raised $500 mn in a London and Lagos listing.
‘Markets are particularly buoyant,’ said Brian Joffe, Bidvest’s chief executive, in September. ‘Money is cheap and there’s quite a lot of demand for this particular asset.’
Corporate governance, however, remains a hurdle for any prospective agreements between the London and Johannesburg exchanges, particularly for UK institutional investors that recall controversial listings from Kazakhstan and Indonesia in the past decade.
Adebayo says governance issues mean the group of companies that might list is ‘not as big as it should be.’ The strength of Africa’s credit market may pose a further problem, he adds, with domestic companies easily able to raise capital through bonds and syndicated loans.
The LSE may also find it has competition from exchanges in Dubai and Singapore, which have also prioritized attracting African companies. Both Qatar National Bank and Investment Corporation of Dubai have made large acquisitions in firms in African countries, including Dangote Group and financial firm Ecobank.
