According to This is Africa, foreign investors have grown a liking for companies emerging out of Africa’s second largest economy, thereby creating attractive possible liquidity for these Nigerian firms.
Commenting on this, LSE’s Head of Business Development for the Middle East and Africa, Ibukun Adebayo said : “The level of interest in the country from global investment houses operating out of London has grown significantly, particularly in the last couple of years.” He added that “there’s been a distinct pick up in terms of the value that African countries see in having a LSE listing.”
According to reports, Mr Adebayo said that the number of companies now preparing to offer their stocks to the public on the London-based market “has grown significantly” compared to the same period last year.
He explained that the attraction to foreign stock exchanges by local companies can be caused by more than one factor. For businesses with the highest capital on their local bourse the desire to get listed on foreign bourses is “about profile building, the binding effect of meeting higher regulatory standards.”
Mr Adebayo noted that “London’s ability to adequately price risk” in the Nigerian market makes it a preferred option for companies from the West African country.
Nigerian Companies on LSE
On July 26, 2007, Guaranty Trust Bank (GTB) became the first sub-Saharan bank and first Nigerian joint stock company, listed on London Stock Exchange and Deutsche Börse. The IPO raised US$750,000,000. Nigeria-based Diamond bank’s listing followed on January of the preceeding year.
In September, the West Africa-focused energy group Eland Oil & Gas became the largest company to float on the LSE’s Alternative Investment Market (AIM), after raising $188 million following a partnership with local oil firm Starcrest to buy a stake in a Nigerian oil block.
Currently, the five Nigerian companies listed on the London bourse are worth a total of $3.5 billion.
In April, Africa’s richest man and Chairman of Dangote Group, Aliko Dangote, announced he intends to free- float a 20 percent stake in the $11 billion cement company to finance its rapid expansion in 2013. The company appointed Morgan Stanley and JPMorgan as co-leads for the London share issue. However, analysts predictions point to late 2013 as the earliest time for the public issuing as Dangote Cement is struggling to satisfy LSE’s strict main market corporate governance requirements.
A report by This is Africa, quotes Andy Gboka, equity research analyst for sub-Saharan Africa at Exotix remarked: “Dangote, if finally completed, could be the first Nigerian name to have a direct listing in London.”
VENTURES AFRICA (November 2012)
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