Kenya recorded the worst performance among African countries in terms of initial public offerings (IPO), with its drought of transactions now in its sixth year, according to a new report by business advisory firm PricewaterhouseCoopers (PwC).
Besides Kenya, other markets that had zero IPOs in the five years to 2021 included Zimbabwe, Central African Republic, and Cameroon.
IPOs, where a company lists on a stock market while simultaneously raising new capital, are important for deepening capital markets and maintaining their vibrancy.
New companies going public replace those that have delisted after being acquired as well as those that go bankrupt.
A lively stock market also helps to further economic goals such as spreading wealth and attracting foreign exchange.
The Africa Capital Markets Watch 2021 report by PwC shows that South Africa topped the list with 16 IPOs since 2017 followed by Egypt at 15 and Namibia with four, raising $4.14 billion (Sh472 billion), $1.22 billion (Sh139.7 billion) and $232 million (Sh26.4 billion) respectively.
Nigeria had two IPOs over the five years and raised $690 million (Sh78.7 billion).
“The reduction of IPOs and capital raising in 2021 indicates that Africa may be falling behind the international market’s ability to leverage the private sector to create investment and wealth,” the report reads.
Kenya’s last IPO was in 2015 when property investment fund ILAM Fahari I-Reit was listed on the Nairobi Securities Exchange (NSE) #ticker:NSE after raising Sh3.6 billion.
Kenya also trailed other East African countries over the five years.
Uganda had two IPOs which raised $195 million (Sh22.2 billion) including that of MTN Uganda which took in $148.5 million (Sh17 billion) last year.Tanzania had one IPO –Vodacom Tanzania which raised $212 million (Sh24.2 billion) in 2017.Rwanda also had one transaction that raised $11 million (Sh1.2 billion) in 2017.The NSE has been lobbying the government to bring more state corporations to the market as a means of expanding the number and diversity of publicly traded firms.There are also tax incentives for companies going public but owners of private firms have so far not responded to the advantages of listing. emwenda@ke.nationmedia.com
