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South Africa is poised for a surge in initial public offerings and fund-raising activity as soon as next year, spurred by optimism that the continent’s biggest economy may be turning a corner after years of lacklustre growth, said JPMorgan Chase & Co.
Positive sentiment has been building with the formation of a business-friendly governing coalition after the African National Congress lost its parliamentary majority for the first time since 1994 in the May 29 election.
That’s triggered a wave of investment by multinationals, rallies in the rand and bonds and a rise of more than 20 percent in the benchmark stock index in dollar terms since June.
“We would expect primary activity to pick up,” said Edward Bell, managing director at JPMorgan in Johannesburg.
“As equity market performance and valuations return to more appropriate levels, the incentive and the ability to issue equity or IPO a business becomes a viable option.”
The Johannesburg bourse is gearing up for an IPO in Pick n Pay Stores Boxer unit, expected before the end of the year. Investors are also looking toward Anglo American Plc’s plans for the spinoff of its platinum and diamond businesses.
Other possible high-profile IPOs include Coca-Cola’s listing of its African bottling business. — Bloomberg
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