Big firms on the continent have been listing on the London bourse.
Nominations for “Companies to Inspire Africa 2018” are now open. Successful nominees of this London Stock Exchange (LSE)-led initiative stand to benefit from exposure to a global audience.
Ultimately, the idea is to woo these companies to list on its Alternative Investment Market (AIMs). And Londoners have made significant strides on this.
Since its launch in 2005 to date, majority of the 111 LSE-listed African companies — with collective valuation standing north of Sh150 trillion — have listed on AIMs.
The segment has become the biggest African stock exchange outside South Africa. But as I pondered over this phenomenal success, I couldn’t help imagine over missed opportunities for African capital markets. This could have been our lunch.
How did we miss the boat? Two scenarios come to mind.
Looking back, it was a bad idea ditching the South Africans. In 2009, Johannesburg Stock Exchange (JSE) had a brilliant idea – list sub-Saharan African companies on its African Board. But after lacklustre demand from African firms more interested in listing in London, it had to scrap the programme after three years of existence.
It had only managed to list two companies. Interestingly, in the same period, LSE had bagged 20 African listings. Perhaps the approach was wrong. Maybe the timing wasn’t right. Possibly JSE was a little patronising. But whatever the issue, the underlying idea was great and should have been supported.
Yes, London’s deep liquidity-prestige-broad investor base commands a great pull but notwithstanding, no one denies that the Africa Board would have “disturbed the peace”.
One other disheartening regret is the limited opportunities to share the African-wide success stories. This reality was played-out not so long ago. With most of the big names listed outside the continent, most Africans missed on the bonanza decade (2000-2010).
During this time, GDP growth rate paced at over five per cent per annum and about Sh78 trillion is estimated to have been added annually to the African GDP. In spite of all this, the average African investor had limited access to the African multi-national.
To give context, all these great brands trading locally—Chicken Inn (Simbisa Group), Pizza Inn, Base Resources (of the Kwale Titanium), Unilever and Old Mutual to name a few share one thing in common—they’re are all LSE-listings.
In other words, foreign investors gained the most on the ‘Africa Rising’ story. Already this year, LSE welcomed its largest African IPO since 2005; Vivo Energy.
The point is; the lack of a bigger board to accommodate opportunities that outgrow their home markets has meant missed investment opportunities for the African.
Not all hope is lost though. The African Exchanges Linkage Project, set to have begun this year, may reverse these losses. The East African Securities Regulatory Authorities (EASRA) is another group championing a similar project.
Let’s amalgamate, unify our liquidity pools and harmonise our trading regimes. Otherwise, our stock exchanges run the risk of being glorified incubators , fattening the lambs for sale. Yes, the Londoners are here. Neo-barbarians are at the gate. Are we going to give away our best 1,000 ideas?
Mwanyasi is managing director, Canaan Capital Ltd
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Note: The results are not exact but very close to the actual.
