More African-Focused Firms Listing On London Bourse

The number of African-focused companies listing on the London Stock Exchange (LSE) is increasing as firms seek to raise capital beyond their home borders.

LSE

Research by global law firm Baker & McKenzie shows that there were 10 Africa-related initial public offerings (IPOs) on the LSE in 2013, more than double the previous year.

London’s Alternative Investment Market (AIM), a market for smaller companies, is increasingly emerging as an exchange of choice for natural resources businesses.

Nigerian oil exploration and production company Lekoil listed on the LSE last May while Seplat Petroleum Development, is expected to list in London this year.

Other Africa-focused natural resources companies listed in London include African Barrick Gold, African Minerals, African Potash, Eland Oil & Gas, Afren, Heritage Oil and Mart Resources.

Africa is experiencing a natural resources boom with exploration and development of minerals in most parts of the continent.

“[Companies] are… no longer limiting capital-raising options to their home jurisdictions. Issuers and investment banks are increasingly weighing the benefits of listing abroad,” says Amar Budarapu, chair of Baker & McKenzie’s global securities practice group.

There are more than 100 African companies listed in London, the majority of them on the AIM.

IPO or stock market launches on African exchanges are also expected to increase in 2014 after a year of less activity. US investment banking firm Goldman Sachs recently predicted a wave of sub-Saharan IPOs as private equity companies seek exits and investors line up to buy into new offerings.

Although capital raised in cross-border IPOs makes up roughly 20 per cent of the global IPO market, Baker & McKenzie predicts that by 2018 they will account for nearly $1 trillion and more than 60 per cent of all capital raised by IPOs.

– The EastAfrican