However, the Index also shows that when compared to the same period in previous years, IPO activity in H1 2018 is low: compared with H1 2016, capital raising is lower by 35%; compared with H1 2015 and H1 2014, value is down by around 70%.

Wildu du Plessis, Head of the Capital Markets Group at Baker McKenzie in Johannesburg says that during the first half of 2018, the largest IPO deal in Africa was Libstar Holding Ltd's launch on the Johannesburg Stock Exchange (JSE), raising USD 243.8 million in early May 2018.

 And one of the most anticipated IPOs in the region is MTN Group's Ghana offering, which could raise as much as USD 500 million when it closes by 31 July 2018, he notes.

Du Plessis, notes that this year, one of most talked about IPOs, dual listed on the London Stock Exchange and the JSE, was Vivo Energy's floatation, which raised over USD 740 million in May. This was the largest listing of an Africa-focused business since 2005.

We have noted an increase in enquiries from our clients around listings and IPOS on the Johannesburg Stock Exchange, as well as interest in listing in other jurisdictions in Africa. Cross border capital raising is seen as a good way for investors to raise money in Africa.

In South Africa, the mood has been mostly positive since Cyril Ramaphosa took over as president in February. He is seen as business friendly and we are hoping that urgent issues regarding policy and regulatory uncertainty will be addressed soon. Recent negative economic news regarding first quarter contractions notwithstanding, South Africa is regarded as a very desirable destination for capital raising.

Du Plessis, who is also the Head of Africa at Baker McKenzie in Johannesburg, notes further that a  number of African companies are planning to list in the near future.

It looks like the coming years could be the best for capital raising in Africa since the global financial crisis, he says.

He says that Lagos, Nigeria, in particular has been identified as a must watch market for 2018.

More companies are lining up to list on the Lagos stock exchange, kick starting Nigeria's IPO market after a long drought, he explains

Sources familiar with the matter said two companies  Skyway Aviation Handling Company (SAHCOL) and Nigerian Reinsurance Corporation  were preparing for initial public offerings this year, while Singapore-owned Indorama Eleme Petrochemicals Ltd planned a public float in Lagos next year.

IPOs dried up in Nigeria after a 2008 crash, aggravated by the global financial crisis, wiped more than 60 percent off the stock market's capitalization. The benchmark share index has since recovered, gaining 42 percent last year but IPOs have yet to resume, apart from oil company Seplat's dual listing in Lagos and London in 2014, du Plessis says.

In general, investors are beginning to delve deeper into African markets than they have before, they are making sure they know and understand each specific target market. They are looking at a target country's approach to governance and corruption; is there rule of law? They look at the GDP and how that impacts on population growth and economic growth and the interplay between them. They look at policy and regulation, location, infrastructure and pricing. They are aware that no two countries are the same in Africa, that each market is unique and that they have to be nimble and adaptable in their approach, he adds.

Global IPO activity

Globally, political concerns and market volatility have dampened the IPO market in the first half of 2018, mainly as a result of lower capital raising in Asia Pacific and EMEA. A total of 676 listings have taken place so far in H1 2018, down 19% on the comparable period last year. The value of listings has also fallen 15% to USD 90 billion.

Worries around geopolitics  in particular US President Trump's protectionist policies, as well as a lack of progress around Brexit negotiations and prolonged political uncertainty in Italy  weighed on investors minds and dented the headline numbers.   Market volatility peaked early in the year to levels not seen in 2017, adding to the challenge of finding the right time to launch an IPO.

However, cross-border IPOs significantly outperformed. A surge in capital-raising in North America's deep capital markets led the charge, with foreign issuers seemingly perfectly happy to list in the US despite protectionist rhetoric and just under half of the billion-dollar IPOs successfully launched in the US. 

Issuers raised more than USD 16.6 billion, an increase of around 15% on the same time last year. The number of cross-border deals also climbed, up 18% to 85, with three of the top ten cross-border IPOs debuting on North America exchanges. While the US proved attractive to 13 Chinese cross-border issuers, Hong Kong continues to be favoured with 18 deals.   This resulted in Baker McKenzie's Cross-border Index value rising to 17.4 from 13.2 in H1 2017, just below the highest recorded  of 18.7 in H1 2014.

"While domestic issuers are adopting a wait and see approach in light of various political issues, fears over globalisation going backwards and economic nationalism haven't reached the cross-border market," said  Koen Vanhaerents, global head of capital markets at Baker McKenzie. "To see cross-border activity going up shows a good degree of health in global equity markets, despite quieter domestic markets."

The dip in Asia Pacific and EMEA is slightly offset by stronger cross-border capital raising in North America and higher domestic listings in Latin America.  EMEA lost top spot for billion-dollar listings to North America, with only two recorded in the first half of the year.  However, markets in EMEA remain active and the volume of cross-border deals remains consistent.

The number of withdrawn IPOs in the first half of the year also more than halved to 11 compared to 23  in H1 2017 as potential issuers and their advisers have become more skilled in navigating uncertainty.

Dealmakers will however be hoping for a less turbulent second half to get more deals away, as economic fundamentals remain reasonably strong with a decline in the global economy not forecast to impact until 2020.

About Baker McKenzie

Baker McKenzie helps clients overcome the challenges of competing in the global economy. We solve complex legal problems across borders and practice areas. Our unique culture, developed over 65 years, enables our 13,000 people to understand local markets and navigate multiple jurisdictions, working together as trusted colleagues and friends to instil confidence in our clients. (www.bakermckenzie.com)