African capital markets halted a streak of three consecutive years of growth, recording a decline in overall Equity Capital Market activity of 28% from 2015 in the number of transactions and 33% from 2015 in terms of capital raised.
PwC issued its 2016 Africa Capital Markets Watch publication last week, showing equity and debt capital markets transactions that took place between 2012 and 2016 on exchanges throughout Africa, as well as transactions by African companies on international exchanges.
ECM transactions included in the analysis comprise capital raising activities, whether initial public offerings (IPOs) or further offers (FOs), by African companies on exchanges worldwide, as well as those made by non-African companies on African exchanges.
Debt capital markets (DCM) transactions analysed include debt funding raised by African companies and public institutions.
Darrell McGraw, PwC Capital Markets Partner based in Lagos, says: “Many African economies, in particular those dependent on resources suffered in a low growth environment, significantly reducing ECM activity, and a continued lack of clarity around foreign exchange risk in Nigeria further discouraged foreign investment.
“Although overall ECM activity decreased in 2016 in terms of both transaction volume and value as compared to 2015, there was a significant increase in ECM activity, particularly IPOs, in the second half of the year, indicating the cautious optimism of issuers and investors as the year progressed.”
Since 2012, there have been 450 African ECM transactions raising a total of $44.9bn, up 8% in terms of capital raised over the previous five year period 2011-2015.
