Consol Bottles Up Its IPO Plans in South Africa

  • Consol planned to use its $240M IPO to pay down its $381M debt
  • Investors expect President Cyril Ramaphosa to strengthen business confidence

Two weeks after filing for a $240 million IPO, Consol, one of the largest glassmakers in Africa reversed course. This would have been the largest IPO in South Africa in 2018. What are the next steps for the South Africa’s equity markets to increase their activity in the country?

Why This Matters: Investors and companies are eager to see the South African economy strengthen under the leadership of new president Cyril Ramaphosa. An IPO by the glassmaker would have been an important signal that the South African economy was on the right track.

The company, which provides glass bottles to the likes of Anheuser-Busch InBev (BUD +0.23%), Diageo (DEO +0.79%) and Heineken (HEIA:EN -0.14%), had numerous plans for the IPO.  Management was going to to use the proceeds to pay investors who had capital locked up in the company since it delisted from the Johannesburg Stock Exchange in 2007. The company also planned to pay down some of the $381 million in debt on its books. While the company cited market conditions as its reason for pulling the IPO, South African business confidence is up. Analysts point to the company’s high debt levels as more telling reason of why it could not drum up the investor interest it desired.

What’s Next: Deutsche Bank (DB:US -1.66%) forecasts 2018 to be a very active year in South Africa’s public markets. The country has a backlog of IPOs that were supposed to happen late last year, but didn’t due to uncertainty around the fate of the prior administration. Now that confidence in the country is up, expect several companies to list on the Johannesburg Stock Exchange over the course of 2018.

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