LSEG in Africa

  • LSEG in Africa

At a glance

  • 1938 - Date of first African firm listing on London Stock Exchange
  • 111 African firms are listed or trading in London
  • $500 million - The amount raised by oil and gas exploration firm Sseplat at IPO

Out of Africa

London Stock Exchange Group is at the heart of the world’s financial markets and has a connection with Africa that stretches back decades. This inaugural report on Companies To Inspire Africa illustrates the continent’s enormous potential for growth and highlights that developing an efficient capital market to fund growth companies
is the best way to foster economic prosperity on the continent.

From Accra to Abidjan, from Casablanca to Cape Town: just a handful of the cities with ties to London Stock Exchange Group. “The histories of Africa and London Stock Exchange are closely intertwined. We understand the risks and the rewards of the continent and are committed to playing a significant part in Africa’s growth story,” says Ibukun Adebayo, Co-Head, Emerging Markets Strategy, International Markets Unit, London Stock Exchange Group.

African companies are particularly well-represented in London and the links with this vast continent date back to the 1930s, when the first African company listed its shares in London. That was African Explosives & Industries, which made blasting explosives and detonators for the gold and diamond mining industries in South Africa. Now known as AECI, it is still listed in London today.

Many more companies have made the same journey to London since then. A total of 1,325 companies from 86 different nations have chosen London to list their shares, attracted by the unrivalled access to capital that a listing on London Stock Exchange offers. At over $149bn, the collective worth of African companies on the London market is second only to the Johannesburg Stock Exchange. In total, there are 111 African companies listed or trading in London, more than on any other international exchange.

And work is underway to foster an efficient capital markets serving companies across Africa. Put simply, this is the best way to accelerate economic growth and create the jobs and prosperity that can be reinvested into other areas of the African economy. Developing a vibrant community of high-growth, small and medium-sized business is a vital part of these efforts.

A thriving community

As this landmark report demonstrates, high-growth, private companies are fast becoming the driving force behind African economies: developing skills, jobs and economic growth. And LSEG continues to play its part in this story, supporting companies around the world to raise capital so they can further invest and grow. African companies looking to London have traditionally come from the natural resources sector – oil and gas, mining and precious metals. But the range of sectors is now broadening as the economies of the continent mature and millions more consumers enter its rapidly expanding middle class. 

“Media, airlines, real estate and consumer goods companies from Africa are now all represented in London and we expect that trend to continue,” says Adebayo. “We also hope to support an environment where African exchanges are able to fund local businesses. We engage with a number of local exchanges on a collaborative basis, to help bring the global liquidity pool of London to Africa.”

It’s with this in mind that LSEG is supporting a Moroccan version of its successful business growth programme, ELITE, in partnership with Casablanca Stock Exchange. The ELITE network, which is also offered in the UK and Europe, offers a structured programme for ambitious private companies looking for support in progressing to the next stage of their growth.

According to the World Bank, micro, small and medium-sized enterprises account for more than 90% of all enterprises in Morocco, a clear indication of their significance to the future growth of the economy.

From Burundi to Britain

In the last ten years, African companies have raised $26bn in London for new and further issues. One such company is Rainbow Rare Earths, a rare earth element (REE) company from Burundi that listed on London Stock Exchange’s Main Market in early 2017.

The first Burundi-based company to list on the market, Rainbow successfully raised $8m in a flotation which saw a host of London institutional investors join its share register. With REEs vital to production in key industries including the growing electric vehicle market, global demand for these materials is only expected to increase. And with one of the highest-grade rare earth projects in the world, Rainbow is striving to become an established rare earth developer in East Africa.

On the occasion of the company’s admission, Rainbow Rare Earths’ CEO, Martin Eales, said: “Listing on the Main Market of London Stock Exchange marks a major step forward in the genesis of the company and its development. Our rare earth project is unique in terms of the quality of the grade and with the strong project economics, the support of our excellent shareholder register and a highly experienced leadership team in place, we are now focused on advancing development to build Rainbow into a significant player in the non-Chinese REE market.”

Close collaboration

LSEG works closely with the major African exchanges, providing trading software and clearing technology. MillenniumIT capital markets technology, which underpins London Stock Exchange’s own trading platforms, is used by 12 African exchanges including Africa’s largest, Johannesburg Stock Exchange, as well as Botswana Stock Exchange and Casablanca Stock Exchange, to name a few.

London Stock Exchange has partnered with a number of these exchanges to enable dual-listings for companies looking to simultaneously list shares in both Africa and London. Utilising a unique cross-border settlement system, Nigerian oil and gas exploration firm Seplat is one such business. Seplat was admitted to London Stock Exchange and The Nigerian Stock Exchange in 2014, raising $500m at IPO to further fund the company’s expansion.

In addition, LSEG’s FTSE Russell benchmarking business has long-standing relationships in Africa, having worked with Johannesburg Stock Exchange to calculate domestic indexes since 2002. More recently, FTSE Russell collaborated with the Nairobi Securities Exchange in 2011 and Namibian Stock Exchange in 2016 to launch Kenyan- and Namibian-focused Index Series. Launching these index series were significant achievements for both of these countries, enabling greater investor participation in these markets.

To realise their potential, African economies need robust, efficient and transparent capital markets to provide growth capital for thousands of unique African businesses, large and small.

To support this evolution, in March 2016, London Stock Exchange Group brought together a dozen highly regarded business leaders, policymakers and investors from across the African continent to form an Africa Advisory Group. This group acts as a forum to discuss the development of Africa’s capital markets and how best to address the challenges and opportunities which this presents.

Over two years, the Africa Advisory Group will be presenting a leadership study, which will deliver specific, evidence-based policy recommendations, aiming to positively influence the progress of Africa’s capital markets.

Small businesses are the lifeblood of African economies. They play an essential role in developing skills, jobs, wealth and ultimately driving economic growth. Developing an effective financial markets infrastructure to boost the economy is the best way to achieve this growth potential and LSEG is firmly committed to working towards this goal.