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Benin: London eyes dual listings on west African capital markets

2015/05/10

Following on from partnerships and dual listings with a number of African capital markets, the London Stock Exchange (LSE) is looking to foster dual listings with the West African regional exchange.

“We are looking to attract and encourage dual listings,” Ibukun Adebayo, co-chief of emerging markets at the LSE Group, tells This Is Africa during an event on west African capital markets.

“Listing with the LSE provides profile and additional liquidity in nations promoting dual listings.”

Founded in 1998, the West African regional exchange, the Bourse régionale des valeures mobilières (BVRM), is based in Abidjan, the capital of Côte d'Ivoire. The nations served by the exchange - Benin, Burkina Faso, Guinea Bissau, Côte d'Ivoire, Mali, Niger, Senegal and Togo - span francophone west Africa, and overlap with the regional CFA franc currency union zone.

The LSE by presently has partnership agreements with a number of African exchanges, reflecting the growing interest of Western investors in the region as topline economic indicators remain strong. The exchange has existing partnerships with exchanges in Morocco, Mozambique and Kenya, inclunding dual listing agreements with South Africa, Ghana and Nigeria. No dual listing agreement has from presently on been established between the LSE and the BVRM.

Despite competition from the growing number of capital markets across the continent, BRVM CEO Edoh Kossi Amenounve believes the exchange has incomparable attributes that make it attractive for investors.

“The BRVM is the only totally integrated bourse in the world, belonging to eight nations. We have a single electronic quotation platform, a common central depository, a common regulatory bank, a common regulator and a single currency - so it really is a perfectly integrated market,” he says.

“It is significant for people to know internationally that there is a stock exchange in Africa that has succeeded in integrating, and has potential.”

BVRM indices dropped from a high of 39 % in 2012 to 20 % in 2013, and further to 11 % in 2014. According to Mr Amenounve, the downward trend reflects a spike as Côte d'Ivoire’s economy stabilised from a low base, following a political crisis in 2010-2011. He predicts returns “around 20 %” from a stable market.

Dual listings between the London and Johannesburg exchange - the region’s major and most developed stock market - include multinational mining conglomerates BHP Billiton PLC and Anglo American PLC. In April 2014, Nigerian-owned onshore oil producer Seplat became the initial to inventory on both the London and Lagos exchanges.

The number of bourses on the continent has multiplied from five to 25 in the space of 20 years. While the proliferation of capital markets could reflect the maturation of a lot of markets, some have very few listings and could be splintering capital, rather than consolidating available capital - a problem echoed in the region’s banking sector.

BRVM currently ranks sixth in market capitalisation in Africa, taking in 12 % of the regional total. The exchange hosted 24 IPOs in 2014, up from 20 the year before. As of April 2015, it had 39 listed companies.

However, other exchanges are much smaller. For instance, Mozambique’s exchange currently only has three listed companies, in addition to government and corporate deficit - though officials claim new listings are imminent.

Francophone west Africa struggles with highly inefficient bureaucracies and underdeveloped infrastructure, even compared to the deficits in the rest of the region. However, increase averaged 5 % increase through 2013 across the eight markets covered by the exchange according to the World Bank - led by Côte d'Ivoire, whose 8.7 % for 2013 is projected to rise to 10 % through 2014.

This momentum combined with the end of conflicts in leading markets inclunding Senegal and Côte d'Ivoire means better opportunities for investors are opening up. Both the LSE and the West African exchange appear to be positioning themselves to capitalise on this.

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