In 2017, approximately $13.5 billion was raised in the equity capital markets in Africa or by African companies in non-African capital markets, a 49% increase from 2016, according to PwC. Similarly, $7.5 billion in non-local currency debt was raised by African companies in international debt capital markets, a 68% increase from 2016. Despite a challenging environment, with public debt approaching critical levels in some countries and concerns over excessive reliance on oil, African businesses are expanding.
PwC’s analysis of 75 companies featured in the inaugural Companies to Inspire Africa 2017 report, by London Stock Exchange Group (LSEG) in partnership with Africa Development Bank Group, CDC Group and PwC, provides clear evidence of significant investment and growth in African business.
Highlights of our analysis recently published in a report titled “One year on: Companies to inspire Africa 2017” include: 15 of the 75 companies obtained additional financing raising $1.9 billion in total, 28 companies completed either a product, geographic or capacity expansion, 21 companies entered into an alliance or joint venture, 16 companies completed an M&A deal.
Simon Venables, Deal origination leader, PwC Africa, said: “The success of these businesses tells an important story to the world: there is huge potential in Africa. Companies are growing but they need external interest and investment for this to continue. While supportive governments, enabling environments and access to funding clearly play significant roles, business transparency and accountability are also essential ingredients to attract a wider audience and fuel the growth of African companies.”
Andrei Ugarov, Corporate finance partner, PwC Nigeria, adds: “For UK investors, Africa offers economic growth that continues to outpace established nations. A swelling middle class, advances in technology and the rise of entrepreneurship has boosted the number of consumers, making the continent more appealing than ever.”
A number of the businesses featured in Companies to Inspire Africa 2017 have taken a lead in obtaining alternative sources of financing beyond traditional bank debt. Examples include issuing the first 10-year infrastructure corporate bond in Nigeria, raising finances through cooperative and social investment companies and numerous stock exchange listings including a record $600 million Eurobond.
Companies from Kenya, Nigeria and South Africa are leading the way in spreading their African footprint beyond their borders. Financial services, consumer services and energy are the sectors where the most expansion took place.
Twenty-one companies featured in LSEG’s Companies to Inspire Africa 2017 report formed alliances and joint ventures in the past year. These include companies based in Kenya, Nigeria and South Africa, with industrial products and telecoms and technology being the dominant sectors.
Mergers and acquisitions continue to be a critical aianalysed, 16 concluded M&A deals from a wide range of sectors including consumer services, financial services, healthcare and pharma, industrials, renewables, technology and transportation.
Nikhil Rathi, CEO, London Stock Exchange plc and Head of International Development, London Stock Exchange Group, said:
“High-growth SMEs are the engine for growth in Africa’s economies, innovating and creating jobs. Many of the businesses identified in ‘Companies to Inspire Africa’ have successfully secured capital to finance their continued success and growth, through equity and bond issuances, and establishing new global partnerships. It is exciting to see the progress of so many firms outlined in this subsequent report, and we warmly congratulate them on their outstanding performance.”