Despite a challenging environment, with public debt approaching critical levels in some African countries and concerns over excessive reliance on oil, African businesses are expanding, said PricewaterhouseCoopers (PwC), the UK-based multinational professional services network
About US$13.5bn was raised in the equity capital markets in Africa or by African companies in non-African capital markets in 2017, a 49 per cent increase from 2016. Similarly, US$7.5bn in non-local currency debt was raised by African companies in international debt capital markets, a 68 per cent increase from 2016, said PwC.
PwC’s analysis of 75 companies featured in the inaugural ‘Companies to Inspire Africa 2017’ report, by London Stock Exchange Group (LSEG) in partnership with Africa Development Bank (AfDB) Group, CDC Group and PwC. The analysis aims to provide clear evidence of significant investment and growth in African business.
Some major pointers in the report include:
· About 15 of the 75 companies obtained additional financing raising US$1.9bn in total
· About 28 companies completed either a product, geographic or capacity expansion
· About 21 companies entered into an alliance or joint venture
· About 16 companies completed an M&A deal
Commenting on the report, Simon Venables, deal origination leader at PwC Africa, said, “Companies are growing but they need external interest and investment for this to continue. While supportive governments, enabling environments and access to funding clearly play significant roles, business transparency and accountability are also essential ingredients to attract a wider audience and fuel the growth of African companies.”
Andrei Ugarov, corporate finance partner at PwC Nigeria, added, “For the UK investors, Africa offers economic growth that continues to outpace established nations. A swelling middle class, advances in technology and the rise of entrepreneurship has boosted the number of consumers, making the continent more appealing than ever.”
A number of the businesses featured in ‘Companies to Inspire Africa 2017’ have taken a lead in obtaining alternative sources of financing beyond traditional bank debt. Examples include issuing the first 10-year infrastructure corporate bond in Nigeria, raising finances through cooperative and social investment companies and numerous stock exchange listings including a record US$600mn Eurobond.
Nikhil Rathi, CEO at London Stock Exchange plc and head of international development at London Stock Exchange Group, said, “High-growth SMEs are the engine for growth in Africa’s economies, innovating and creating jobs. Many of the businesses identified in ‘Companies to Inspire Africa’ have successfully secured capital to finance their continued success and growth, through equity and bond issuances, and establishing new global partnerships.”
