Africa bucks international trend

Safaricom Ltd, Celtel Zambia Plc and Dangote Flour Mills Plc are helping turn Africa into the world's hottest source for initial public offerings.

"Africa is the last frontier in terms of stock markets, emerging economies and underdeveloped capital markets," said Joseph Rohm, London-based fund manager at T. Rowe Price Group Inc, which oversees $25 billion in emerging-market equities and bought Kenyan mobile-phone company Safaricom shares in a sale that ended in April. "That's why it's a great opportunity."

As the world's poorest region is wracked by corruption and civil unrest and companies globally are shelving a record number of IPOs, initial share sales are booming from Nigeria to Kenya to Zambia. Ghana, a country of 22.5 million sandwiched between Togo and Ivory Coast, has the world's best-performing stock index this year, with a gain of 46 percent.

The Washington-based International Monetary Fund forecasts that the 44 economies of sub-Saharan Africa it tracks will expand at a 6.7 percent rate next year, exceeding the average growth of all emerging markets for the first time in seven years.

Safaricom, which started trading yesterday, raised about $820 million selling 10 billion shares in the biggest IPO in sub-Saharan Africa. The Nairobi-based company attracted four times more applications than shares.

Kenya's largest mobile-phone provider will boost the market capitalization of the Nairobi Stock Exchange by 7 percent, according to Chris Mwebesa, the bourse's chief executive. Exxon Mobil Corp, the world's biggest company by market value, constitutes 2.8 percent of the $16.2 trillion US stock market.

Companies in sub-Saharan Africa, excluding South Africa, may sell at least $3 billion in new shares this year, 24 percent more than last year's record, data from Cape Town-based Investec Asset Management and Bloomberg show. It's also the only region where the amount of new equity sales have already eclipsed last year's total, Bloomberg data show.

The $200 million IPO of Celtel Zambia, that country's biggest mobile-phone provider, was also oversubscribed, Chief Executive Officer David Venn said last month. The Lusaka-based company begins trading on the Lusaka Stock Exchange on June 11.

Index climbs

The S&P Africa Frontier Index has climbed 27 percent in the past year, versus a 3.6 percent decline in the MSCI AC World Index tracking 48 countries. The 46 percent gain in Ghana's benchmark index this year was the biggest in dollar terms among 89 indexes tracked by Bloomberg.

At least 22 sub-Saharan companies in industries from banking and insurance to food and media are planning IPOs this year, according to data compiled by Hamilton, Bermuda-based Securities Africa Ltd and Bloomberg.

Uganda may sell its 40 percent stake in Kampala-based National Insurance Corp, the nation's fourth-biggest insurer. Lusaka-based Zambia National Commercial Bank Plc may begin an IPO of 26 percent of its shares in July.

Dangote Flour, the maker of flour, pasta and polypropylene bags that raised $159 million, has jumped 43 percent since its listing in February. Nigerian Bag Manufacturing Company Plc, which makes woven polypropylene bags used to carry cement and detergent, advanced 29 percent since its debut in April. Both are based in Lagos.

Agencies

(China Daily 06/10/2008 page16)