Sub-Saharan firms open up as equity deals hit $2.9bn H1

Equity and equity-linked issuance in sub-Saharan Africa (SSA) totalled $2.9 billion during the first half of 2014, twice as much as the same period last year and the highest first-half total since 2011, according to latest data from Thompson Reuters deal intelligence and SSA investment banking analysis.

The deals which involved energy and the banking sectors in Nigeria are indications that the institutions are aggressively moving to shore up their capital levels through the thriving equity markets and, by implication, neutralising their shareholding structures. This would make the institutions internationally competitive and more transparent in their operation, with the attendant confidence it engenders.

The proceeds from follow-on offerings accounted for 55 percent of Equity Capital Market (ECM) activity, while initial public offerings (IPO) and equity-linked issuance accounted for 23 percent and 22 percent, respectively, the data showed.

“Energy & Power was the most active sector for equity issuance in the region, followed by Financials,” said Keith Nichols, managing director, Africa, Thomson Reuters.

The largest IPO and second-largest equity offering during the first six months of the year was from Nigeria-based Seplat Ltd. The oil company raised $540.5 million in a dual listing on the London and Nigerian Stock Exchanges in April.

Unity Bank was also among the top 10 largest equity offering, with a total of $242 million raised between May and June of this year.

Nigerian banks are moving to shore up capital levels by taking advantage of surging equity markets to sell stock and boost tier-one capital as they aim to grow lending and assets.

Stock valuations close to record highs make it easier for lenders to raise funds through common equity, which dilutes existing shareholdings.

Nigerian equities have risen 4.12 percent year to date (July 16), with the main stock index closing at 43,030.27 points on Wednesday.

The total stock market capitalisation of N14.2 trillion has surpassed the highs of 2008 reached before the homegrown banking crisis. Seventy-five percent of deals involved a South African issuer. The top four sectors for ECM issuance were Financials, Energy and Power, Consumer staples and Healthcare.

Rand Merchant Bank took the top spot in the sub-Saharan African Equity Capital Markets financial advisor league table during the first half of 2014, with 18 percent of the market.

Others in the top five include Citi Bank, BNP Paribas, Morgan Stanley and Barclays.

Fees from equity capital markets underwriting increased 65 percent to $66.7 million, marking the highest first-half total in the region since 2007.

For SSA Debt Capital Markets (DCM), total issuance reached $5.2 billion during the first half of 2014, an increase of 3 percent compared to the same period last year, and the highest first-half total since 2011.

The African Development Bank (AfDB), headquartered in Cote d’Ivoire, raised a total of $2.7 billion, accounting for 53 percent of activity in the region. 

This was followed by sovereign debt issuance from Zambia of $991.7 million, and emerging market corporate issuance from Nigeria-based Zenith and Access Bank of $494.7 million and $400 million, respectively.

Deutsche Bank took the top spot as financial advisor in the SSA debt ranking for the first half of 2014 with $1.2 billion, or a 22 percent share. Barclays and Citi followed in second and third positions, respectively.

PATRICK ATUANYA