Q4 2018 New Markets Investor

Q3 2016
sification.” Such reforms have enabled Morocco today
to be on a much more stable, much more prosperous
platform, where they rely on their competitive advantages
to attract other businesses to the country.
Since the beginning of the year, for example, the
automotive sector has been the largest export sector. In
2015 the rise in Morocco’s exports of cars was around
32.6%, 26% for electronics and 17% for aeronautics.
Mr. Boussaid notes: “The immediate response to this
extremely positive assessment of the economic performance
of our country enables us to attract increasing
numbers of foreign investors. Last year we achieved the
biggest increase in foreign investment yet, at around $4
billion – an increase of more than 23% compared to the
previous year.”
In addition, efforts by the government to reduce red
tape have been hugely successful. In the latest World
Bank Doing Business report Morocco moved up eight
places in its ranking, while the most recent World
Economic Forum competitiveness survey, Morocco
climbed five places.
Morocco prides itself as an emerging financial center,
with Casablanca’s Finance City, the regional financial
hub, progressing very well.
The net result of the reforms and improvements in
access to capital is that Morocco has become the second
most attractive country in terms of foreign direct
investment on the African continent, behind only South
Africa.
Morocco is leading the way in terms of access to capital
and financial markets in Africa, and, given the rewards
that it is already experiencing, it is just a matter of time
before other countries get on board. With The African
Development Bank (AfDB) and the African Securities
Exchanges Association (ASEA) recently signed MoU
aimed at addressing the lack of liquidity in African
capital markets by creating linkages across markets,the
reputation that previously existed with regard to African
states and poor access to capital and financial markets is
now a thing of the past
Nigerian Billion dollar IPO
African IPOs are set to raise over USD3.1 billion this
year, more than any year since 2010 with 15 IPOs
already in the pipeline, and at least 3 more on the near
horizon with Egypt, Nigeria and South Africa likely to
be the most active exchanges
Technology, Consumer Essentials and Industrials are
set to be busiest sectors.Fifteen IPOs are already in the
pipeline, with one, Nigeria’s Interswitch, which processes
payments for banks and operates in five African
countries, could be Africa’s first billion dollar IPO and
first public Fintech company if it proceeds.Botswana’s
biggest IPO to date, that of Botswana Telecommunications
Corporations Limited, closed on 4 March; a 1.68
times over-subscription, making it one of the largest
and most historic IPOs in Botswana’s history. 2016 If
the 15 in the pipeline already proceed they are likely to
raise USD1.5 billion more than last year’s 21 African
IPOs; almost twice as much as the total raised in 2015
and more than raised 2011-2013 combined.
In reality the equity deal volume may well be higher,
with deals not currently included in the formal pipeline
including: Tanzania’s Dar es Salaam Stock Exchange’s
plan to self-list this year;
Real estate fund Tadvest’s dual-listing in Mauritius and
Namibia; Mauritian retailer Compagnie des Magasins
Populaires’ recently announced USD4 million rights
issue; and Mauritian-listed Atlantic Leaf Properties’
USD70 million equity raising via a private placement.
“These are challenging economic times for those of Africa’s
economies dependent on commodities for much
of their income, while so-called “hot money” flows out
of emerging market funds investing in Africa.” said
Koen Vanhaerents, Baker & McKenzie’s Global Head
of Capital Markets. “So it is positive to see steady progress
in Africa’s equity capital markets, with a strong
pipeline so early in 2016 and potentially larger deals
than we’ve seen for some time.”
Hot spots
Egypt looks set to be a particular bright spot as delayed
deals come back on stream, particularly in the retail,
financial services and food sectors
Nigeria’s pipeline looks reasonable for later in the year
in the tech, telco and transport sectors.
South Africa will inevitably see more than the two
deals in the pipeline come to fruition after 9 IPOs last
year.
Mauritius continues to act as an offshore financial centre
for Africa, with equity offerings such as rights issues
and private placements as well as IPOs.
The East African Securities Exchange Association is
seeking to fast-track integration of their markets, which
may unlock demand among issuers while increasing liquidity,
with Rwanda alone predicting 3 IPOs this year.
Industries
Energy & Power, Real Estate, Financial Services and
Healthcare have been the most active sectors over the
past five years, but increasingly Consumer Staples and
now Technology are joining them as the most active
sectors as Africa’s capital markets begin to broaden and
deepen in tandem with a growing middle class demanding
more sophisticated services.
Edward Bibko, head of the Firm’s EMEA Capital Markets
Practice, said: “There’s enormous pent up demand
among issuers to conduct capital raisings, particularly
in Egypt, which is showing strong growth and the
emergence of a larger middle class. The wider continent
still faces challenges and there is little local institutional
investment or retail demand other than in the
biggest economies. This means larger companies have
to dual-list in a global financial centre like London, as
well as their home market, to avoid volatility driven by
the fact that skittish international investors make up the
majority of market activity.” ■
TS
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New Markets Investor