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Country reportsSeptember 2 2013

Africa’s companies turn to foreign exchanges

In the past three years, international equity issuance from African companies has outpaced listings on the continent. This trend looks set to continue for the time being, thanks to the small size of most African exchanges and global investors’ increasing appetite for exposure to the continent.
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Africa’s companies turn to foreign exchanges

Africa’s equity markets have developed rapidly in the past decade. The continent’s economic boom in that period, during which its growth rate has averaged about 5.5% annually, has led to high demand for publicly traded shares, while reforms of capital markets have encouraged an increasing number of companies to list. The result has been a steep rise in the market capitalisation of African stock exchanges, from less than $200bn in 2002 to more than $900bn at the end of 2012, according to South Africa’s Standard Bank.

But African companies have not just been growing on their domestic bourses. Plenty of them have opted to issue stock abroad. Since 2011, of the $27bn of public equity raised by African firms or those with their main activities on the continent, 60% has been sold outside Africa. Recent international issuers have included Nigeria’s Zenith Bank, which listed $850m of its shares through global depository receipts in London in March, and Eland Oil and Gas, an oil explorer focused on Nigeria, which raised £118m ($183m) in an initial public offering in London in September 2012.

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