Johannesburg - The listing of Dis-Chem, Liberty Two Degrees and Ethos last year and a stronger rand saw capital raised by the JSE rise 25 percent compared with 2015.
A study by professional services firm PricewaterhouseCooper (PwC), found that the 37 initial public offerings (IPO) on the JSE in the period raised a total capital of $2.7 billion (R35.5 billion) compared with $658 million in the comparative period.
The firm said capital raised from Dis-Chem's IPO was worth $305 million, while Liberty Two Degrees raised $271 million and Ethos' IPO fetched $127 million. Dis-Chem’s IPO was the best on the continent in the period.
The report explored new primary market equity initial IPOs and further offers (FOs) by listed companies, in which capital was raised on Africa’s principal stock markets and market segments.
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PwC said it was also a record year for the JSE’s AltX, which saw the secondary listing of Mauritian private equity investor, Universal Partners, contributing to an AltX listings value of more than six times that of the prior year.
The firm said there was more activity in the African IPO market in the second half of 2016 compared with the first half, and expected the up-tick movement to continue this year.
“When analysing 2016 activity by quarter, data indicates a rebound in market sentiment in the second half of the year, which comprised 80 percent of 2016 IPO capital raised; 53 percent was raised in the last quarter alone,” the report said.
The financial services sector continued to dominate the African IPO market with 45 percent of total value and 55 percent of total volumes. It said the second most active sector was consumer goods, which raised 31 percent of total IPO proceeds on the continent.
Over the past five years, there have been 340 FOs by African companies, raising $38.4 billion on both African and international exchanges.
PwC said the transaction volumes in the FO market for 2016 declined 22 percent, while the total value of the transactions went down by 34 percent in the period. It attributed this to uncertainties in African and global economies.
The firm said 85 percent of FO proceeds were raised either by South African companies or by foreign companies listed on the JSE.
It said on the negative side, the major FOs conducted during the year were targeted at acquisitions as opposed to divestiture. This included the $662 million rights offer conducted by Remgro in October and the $624m raised in September by Steinhoff International related to its further diversifying acquisitions of UK and US retailers.
Between 2012 and 2016, FO capital raised on the JSE represented 87 percent of total African FO capital raised and 71 percent of total transaction volume. The financial services sector dominated the African FO sector with 47 percent of total FO value, followed by the healthcare with 12 percent.
The August rights offer and private placement by Ascendis Health of $201.6 million, targeted at acquisition of two European health brands, and the proceeds from GlaxoSmithKline’s divestiture of its stake in Aspen Pharmaceuticals comprised 97 percent of the healthcare FO value in 2016.