JOHANNESBURG - Nigeria's commercial capital Lagos has been identified as a must watch market for capital raising in 2018, according to a cross-border index compiled by multinational law firm Baker McKenzie.
More companies were lining up to list on the Lagos stock exchange, kick starting Nigeria’s initial public offering market after a long drought, said Wildu du Plessis, head of the Capital Markets Group at Baker McKenzie in Johannesburg.
Sources say Skyway Aviation Handling Company and Nigerian Reinsurance Corporation are preparing for initial public offerings this year, while Singapore-owned Indorama Eleme Petrochemicals Ltd plans a public float in Lagos next year.
“IPOs dried up in Nigeria after a 2008 crash, aggravated by the global financial crisis, wiped more than 60 percent off the stock market’s capitalization," du Plessis said.
"The benchmark share index has since recovered, gaining 42 percent last year but IPOs have yet to resume, apart from oil company Seplat’s dual listing in Lagos and London in 2014."
On the whole, domestic and cross-border IPO capital raising by African issuers in the first half of 2018 increased by 33 percent year-on-year to US$396 million, while volume grew by 25 percent to five IPOs, Baker McKenzie said.
During the first half, the largest IPO deal in Africa was Libstar Holding Ltd's launch on the Johannesburg Stock Exchange which raised $243.8 million in early May 2018.
One of the most anticipated IPOs in the region was MTN Group's Ghana offering, which could raise as much as $500 million.
“We have noted an increase in enquiries from our clients around listings and IPOS on the Johannesburg Stock Exchange, as well as interest in listing in other jurisdictions in Africa. Cross border capital raising is seen as a good way for investors to raise money in Africa,” du Plessis said.
"In general, investors are beginning to delve deeper into African markets than they have before, they are making sure they know and understand each specific target market. They are looking at a target country’s approach to governance and corruption."