African Companies Look to Level Up on the London Stock Exchange

  • More than 6 African companies are considering going public on the London Stock Exchange
  • Vivo Energy raised $734M in the London Stock Exchange’s largest 2018 IPO

JP Morgan (JPM -0.25%) has received inquiries from at least six African companies which want to look into an initial public offering on the London Stock Exchange (LSE). The largest IPO on the LSE this year was by African oil marketer Vivo Energy (VVO:LN -1.82%). The company secured a $2.65 billion valuation after raising $734 million on the LSE. Does the prospect of more African companies listing in London signal the global significance of the continent’s private sector?

Why This Matters: It’s not often you hear about Africa-based companies operating on a global scale as publicly listed entities. Nearly a decade ago the Boston Consulting Group issued a report predicting several companies were going to expand their reach beyond Africa and compete on the global stage.

Last year three companies with Africa operations listed shares on the LSE. This increased interest is evidence of the continued growth of Africa’s private sector. Companies are building strong management teams and reaching a scale which makes going public in the West a realistic option.

McKinsey & Company research shows there are at least 400 African companies with revenue exceeding $1 billion. As they continue their growth path perhaps we’ll see even more countries look into going public on the LSE.

Situational Awareness: African companies considering going public in London is a strong indicator of the opportunity it presents. Investors probably should exercise patience as it pertains to when companies will actually list. For example, the Dangote Group which is one of the largest conglomerates in Africa has been considering a dual listing on the LSE since 2012.

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