Fifteen African firms collectively raised nearly $2 billion last year, says PwC

23 April 2018 Authored by Consultancy.africa

As Africa’s economy becomes an increasingly integral part of the global business world, a handful of businesses from the region are beginning to receive recognition for their rapid expansion. According to a new report published by PwC in conjunction with the London Stock Exchange Group (LSEG), nearly $2 billion was raised in financing last year by just 15 firms.

Markets across Africa, while varying in several ways, have been displaying similar economic trends in recent years, most of which are highly promising. Most African countries, for instance, have a very low median age, which cumulatively makes the continent the youngest region in the world, and entails the imminence of a large population in the productive age-bracket. 

Digitalisation is another highly promising indicator common to several economies, with the continent collectively set to surpass 1 billion internet connections by 2022. In contrast with the global scenario, the banking sector has also registered good performance across most African markets in recent years.

Much like other developing economies, however, growth in these markets is being driven by a handful of firms that are generating substantial revenues and are on strong growth trajectories. In a new report titled ‘Companies to Inspire Africa,’ Big Four professional services firm PwC has tracked the growth of some of the continent’s largest companies, providing context for the markets in which they operate.

Financing raised by top African companies

The report surveyed over 340 of the biggest companies across the continent, with a majority coming from Western (124) and Eastern (103) Africa. Northern and Southern Africa collectively account for 150 of the firms surveyed, while Central Africa is home to the least — at 18 companies. 75 of these companies, as per the report, saw growth of some kind over the last year. 

In terms of growth trajectories, the report categorises growth over the last year into four indicators. The amount of funding raised features on the list, alongside product or geographical capacity expansion, the completion of an M&A deal, and entry into a joint venture.

In terms of financing, 15 companies collectively raised $1.9 billion last year. Most of this funding was sourced through bilateral bank financing, followed by IPOs, with private equity fundraising coming in as the third biggest source. IPO issues took place on the Johannesburg Stock Exchange (JSE), as well as on the exchanges of Tunisia and Rwanda.

Organic expansion of top African companies

The financial services sector was the most active in IPO fundraising with five issues in total. The energy sector, which is undergoing a period of transformation in many African countries, was also fairly active, raising funds through four IPOs. Notable firms which raised funds include Viathan Engineering of Nigeria, Helios Towers Africa, and Brainworks Capital Management.

The highest number of companies, at 28, registered growth in terms of expansion in either their geographical reach, their product offering, or their capacity of production, in that order. Nigeria, South Africa, and Kenya, which are the largest economies on the continent, boasted the greatest number of expanding companies, at 8, 5, and 5 respectively.

In terms of sector-specific expansion stories, the financial services sector was the most active yet again with 8 companies, followed by the consumer services sector at 7 companies. Notable firms that saw this nature of growth include South African firm AllLife Group, Ethiopian firm Dashen Breweries, and Fan Milk of Ghana.

Inorganic expansion of top African companies

16 of the companies, meanwhile, saw inorganic growth through M&A deals valued at $30 million or higher, despite the fact that the M&A market on the continent hit a five-year low last year. The financial services, healthcare & pharmaceutical, industrial products, and the technology & telecoms sectors were all tied at the top of this segment, at three deals each. 

Firms of note in this segment include Craft Silicon of Kenya, which acquired a minority stake in EatOut; Horizon Equity partners, which acquired South African firm Dynamic Fibre; and Hygeia Nigeria, which acquired Gold Cross Hospital. 21 companies, meanwhile, saw growth through joint ventures and alliances, with industrial products emerging as the top sector (7 agreements).

Commenting on the findings of the report, CEO of PwC Africa Hein Boegman said, “By showcasing resilience and adaptability in spite of challenging environments, the story of the potential that lies within many African economies and companies demonstrates the strong fundamentals that continue to exist in the continent.”

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