London looks to Africa to bolster flotation activity

 
David Hellier
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With all the nervousness about governance issues at Russian companies wishing to list their shares in London, and with Nat Rothschild’s London-listed Indonesian venture Bumi seemingly ending in tears, now is perhaps not the best time for the London Stock Exchange to be hosting a conference about the opportunities in Africa for investors.

In theory African companies, due to the very fact they are part of an emerging economy that has rudimentary rules in place, bring with them more than their fair share of risks.

But there is something of a buzz building up around the event, mainly because the continent looks set for above average growth over the next few years and London is fast becoming the go to place for African businesses to raise money and list their shares.

There is currently $70bn of market capitalisation worth of African companies now listed in London, which is the largest concentration outside of South Africa.

One of those companies present next Thursday, Dangote Cement, is headed for a London share listing in the next few months which would propel the company into the FTSE 100, with the group likely to be valued at around £8bn.

Dangote, which is controlled by the Nigerian billionaire Aliko Dangote, is expected to strengthen its management by appointing Tim Surridge, formerly of professional services firm KPMG, as its chief financial officer. Surridge’s task, in the months ahead, will be to bring all the reporting procedures up to a standard common with other FTSE 100 groups. He will be attending the LSE event along with an audience that brings together investors of all types.

The company is set to appoint an independent chairman in the months ahead, one strong enough to stand up to the controlling shareholder who will be selling down his shareholding as part of the flotation.

Banks likely to act on any IPO include JP Morgan, Morgan Stanley and Goldman Sachs, although it would not surprise anybody if one or two smaller houses with special African expertise were added at a later date.

Nigeria might not be known for its high standards of corporate governance but those on the Dangote team are determined to get this right. “This would be a huge flotation. We’re flying the flag for Africa and we’re determined this should go off smoothly, even if that means we might need more time for investor education,” said one of those working on the float.

UBS bankers await grim news

Earlier this year the Swiss-based bank UBS issued a strong message to the market that it was committed to its investment banking arm by poaching star banker Andrea Orcel from Bank of America Merrill Lynch.

But in recent days the talk has been all about the retrenchment of the business, with 400 jobs expected to go globally, possibly as part of a bigger plan to de-emphasise investment banking.

The bank is currently ranked tenth in the year to date in terms of M&A revenues globally, according to Dealogic, its lowest ranking to date. Despite Orcel, it might have further to fall. david.hellier@cityam.com
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