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Private Equity-backed IPOs Rise in Africa – PwC, AVCA

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  • Private Equity-backed IPOs Rise in Africa – PwC, AVCA

The African Private Equity and Venture Capital Association and PwC Nigeria have said private equity-backed Initial Public Offerings are among the largest IPOs in Africa.

They stated this in the ‘Africa Private Equity-backed Initial Public Offering’ report, which was released on Friday in Lagos.

The report provided a historic analysis of private equity-backed and non-private equity-backed IPOs between 2010 and 2017 on exchanges throughout Africa, as well as IPOs by African companies on international exchanges.

The Head of Research, AVCA, Enitan Obasanjo-Adeleye, said it had been noted long ago that the proportion of private equity exits through IPOs in Africa was lower relative to markets such as the United States and United Kingdom.

She said the capital markets played a fundamental role in the efficient allocation of capital, describing them as a critical exit route for private equity globally.

Obasanjo-Adeleye said the report provided data, which she said would be important for ongoing dialogue around measures that needed to be taken to narrow the IPO gap between Africa and other continents.

She said, “We are excited to have worked with PwC to highlight private equity-backed IPO activity on the African continent. Over the period from 2010 to 2017, African private equity-backed IPOs, as a percentage of total African IPOs, averaged just 16 per cent in terms of volume and 23 per cent in terms of value.

“In comparison, over the same period, private equity-backed IPOs in the US averaged 39 per cent in terms of volume and 44 per cent in terms of value, and in the UK, 36 per cent in terms of volume and 45 per cent in terms of value.

“During the period under review, there have been 30 African private equity-backed IPOs raising a total of $3bn. Consistent with overall IPO trends in Africa, the Johannesburg Stock Exchange led as an exit destination in terms of value of private equity-backed IPOs, with nearly $2bn raised.”

Obasanjo-Adeleye noted that an analysis of post-IPO performance showed that private equity-backed IPOs in sub-Saharan Africa showed a price return of 27 per cent higher than their offer price.

According to her, on an average, over a one-year time horizon post-IPO, this closely approximates the performance of their non-private equity backed IPO peers of 30 per cent.

She added that the performance of North African shares over the same time horizon in the period analysed differed, with post-IPO performance returning only zero per cent and eight per cent growth over offer price for private equity floats and non-private equity floats, respectively.

A Partner, PwC Capital Markets, Johannesburg, Andrew Del Boccio, said, “Private equity funds backed a combined 16 per cent of the IPOs in Africa between 2010 and 2017, with average one-year returns on sub-Saharan Africa transactions closely in line with non-private equity IPOs.

“This suggests an opportunity to further explore the capital markets as a plausible exit strategy for private equity investments in the region. Over the period, a relatively small number of private equity-backed IPOs contributed significantly to the value of proceeds raised.

“Among others, these include the 2010 $681m IPO of Life HealthCare Group on the JSE, which constituted 23 per cent of total private equity-backed IPO capital raised between 2010 and 2017, and the 2014 $348m IPO of Alexander Forbes, also on the JSE, constituting 12 per cent of total private equity-backed IPO capital raised.”

Del Boccio stated that the $819m dual listing of Vivo Energy on the JSE and London Stock Exchange, which took place in May 2018, raised more capital than any African private equity-backed IPO since 2010.

The Associate Director, Capital Markets, PwC Nigeria, Alice Tomdio, said the Vivo Energy IPO was clear evidence that the IPO market was open to companies with attractive equity stories and a proven track record of growth.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Banking Sector

COVID-19: CBN Extends Loan Repayment by Another One Year

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Central Bank Extends One-Year Moratorium by 12 Months

The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.

The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.

In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.

The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.

“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

“Following the expiration of the above timelines, the CBN hereby approves as follows:

“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.

“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”

It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.

To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.

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Finance

MTN Nigeria Generates N1.35 Trillion in Revenue in 2020

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MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020

Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.

The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.

Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.

This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.

MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.

MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.

The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.

Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.

MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.

While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.

The number of shares issued and fully paid as at year-end stood at 20.354 million.

MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.

Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.

“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.

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Finance

Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website: www.gtlregistrars.com, complete and submit to the Registrar or their respective Banks.

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