SAFARUCOM 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. His company, which oversees US$25 billion in emerging-market equities, bought Kenyan mobile-phone company Safaricom shares 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 jumped as much as 60 percent to 8 Kenyan shillings (12 US cents) as it began trading yesterday, according to Nairobi-based Tsavo Securities Ltd. The company raised at least US$800 million selling 10 billion shares in the biggest IPO in sub-Saharan Africa, attracting 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 US$16.2-trillion US stock market.
Companies in sub-Saharan Africa, excluding South Africa, may sell at least US$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 News 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 US$200-million IPO of Celtel Zambia, the 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 this Wednesday.
The S&P Africa Frontier Index climbed 27 percent in the past year through last week, 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 Securities Africa Ltd.
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 US$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.