Economic Boom Fuels Flurry of IPOs in Sleepy West African Bourse, Says CEO

ABIDJAN (Capital Markets in Africa) – West Africa’s regional bourse aims to lure investors and increase the number of listings by more than a third in the next four years as some of the world’s fastest economic growth rates boost demand for capital.

The Abidjan-based Bourse Regionale des Valeurs Mobilieres, or BRVM, is targeting 16 new listings by 2020 in the telecommunications, finance, agribusiness, civil engineering and mines and energy industries, Chief Executive Officer Edoh Kossi Amenounve said in an e-mailed response to questions.

The BRVM trades securities of 43 companies throughout eight West African nations and is heavily weighted toward banks and telecommunications. The exchange has recorded six initial public offerings since late 2014 after years marked by just a few listings. The Ivorian unit of Morocco’s Attijariwafa Bank, known as Societe Ivoirienne de Banque, Burkina Faso’s largest lender, Coris Bank International, Groupe Bank of Africa’s Mali unit and Ivorian sugar producer Sucrivoire made their debuts on the BRVM in 2016.

“We hope that the listing of new companies in the past three years will constitute a fresh start for the BRVM,” Amenounve said. “The new listings will bring a renewed interest and convince companies that are still reluctant to take the leap.”

Index Doubled
The benchmark index has more than doubled in six years even though it slipped 3.9 percent last year. The Nigerian Stock Exchange All Share Index slid more than 6 percent in 2016 and Ghana’s main gauge declined 15 percent. The benchmark index in South Africa, the continent’s largest exchange, was flat last year after four years of gains.

Companies trading on the BRVM are operating in some of the fastest growing countries in the world, according to World Economic Forum data. Ivory Coast is leading at an average of 9 percent growth per year since 2012.

“Senegal is emerging as a challenger, partly because of the exploitation of new energy discoveries,” Bloomberg Intelligence analyst Mark Bohlund said in a note on Jan. 18. “Increased mining output should lift expansion in Burkina Faso and Mali.”

The IPO of Ivory Coast lender NSIA Banque, which was originally planned for 2016, should happen this year, Amenounve said. The BRVM will seek the listing of two other Ivorian banks as part of the nation’s privatization program. Discussions are also under way with companies based in other countries in the region, including Benin, he said.

The market capitalization for stocks and bonds was 9.9 trillion CFA Francs as of Feb. 3. While the value of trades on the BRVM have risen fivefold since 2011, last year’s total of 409.3 billion CFA francs ($670 million) is still less than the 14.2 billion rand ($1.1 billion) traded Monday on stocks listed on the broadest gauge of the Johannesburg Stock Exchange.

Potential Listing
The bourse will soon resume talks with Orange SA’s Ivory Coast unit for a potential listing, Amenounve said. The nation merged its landline operator last year with Orange Cote d’Ivoire and is now considering selling its 15 percent stake in the new entity. The company may be valued as high as $6 billion, which would considerably increase the market capitalization of the exchange.

The exchange’s CEO said interest from investors is growing in the region, citing oversubscription for last year’s IPOs. To attract foreigners the bourse is still looking to bolster liquidity, which remains “relatively low,” and is encouraging some companies to split their shares and agree to float at least 20 percent of their equity, he said.

The bond market will remain dominated by sovereigns in 2016, with Ivory Coast and Senegal being the biggest issuers, Amenounve said. 

Meanwhile, the opening of a sukuk bond index on the BRVM last year will boost the interest for Shariah-compliant bonds in the region, he said. In October, the BRVM started to trade five sukuk bonds worth as much as 766 billion CFA francs.

This move “suggests a massive use of Islamic bonds as well as the arrival of a new kind of investor seeking Islamic products,” Amenounve said.