“Fundraising via small cap IPO” was the title of a webinar last week, that was hosted by Jonathan Nelson of HF Capital and which featured Gokul Mani and Ope Sule, both of the London Stock Exchange (LSE).
In nine months of 2021, London has had 81 IPO deals that have raised $20 billion. It is one of the top 3 global exchanges after the USA and Hong Kong, but London is the largest international market (of the 2,000 listed firms, 700 are not from the UK), while the others mainly comprise local firms.
There are 160 African firms on the LSE and these include Airtel Africa, Vivo, Jumia and Acorn.
Why list at London?
- Firms will get the right price: With $100 million assets, a company can raise $35-40 million
- A listing makes it easier to raise more money; when a company is private it can spend 6 months raising money. But once listed on the LSE, it can raise $30-40 million overnight
- 30% of LSE firms are listed on 2 or 3 other exchanges. London partners with Nigeria and South Africa exchanges so if a company lists in London, it doesn’t have to provide too much additional information to list on South Africa with a bit more in Nigeria.
- To list at London, a company should be valued at about $50-70 million for the Aim board and $150-200 million for the Main one.
- Compare this to the US where a company needs to aim for a $5 billion valuation. If this is lower than $3-4 billion, the US is not for them, but London will give that investor appetite.
- London is primarily institutional and by fundraising there, companies are dealing with professional money managers while China is mainly retail (45-50%) as well as the US (30-45%), London retail is 10-12%.
- London can value technology firms, unlike (African) local markets – and most of the technology firms raising money this year are loss-making, but the market can still price them.
What firms will need to do?
- It costs a lot to raise money in terms of the time to meet investors and do roadshows.
- To raise $10-20 million, the fundraising cost is 5-6%, but for a larger target of $100 million, it would be 2.5-3.5%.
- Firms are advised to hire a public relations (PR) as well as investor relations (IR) firms that are based in London – spending $200,000 a year for these.
During a funding session for entrepreneurs last year it was revealed that Kenya has an amnesty for people to declare offshore wealth and repatriate this and that the country expected $3 billion in extra collections from this initiative in 2018. The Kenya government currently collects tax revenue of about $14 billion a year and there was a question on if the additional funding generated could become a source of competition for local private equity funds.
The actual notice was first published in July 2017 by the Commissioner of Domestic Taxes at the Kenya Revenue Authority (KRA) and read “The amnesty under Section 27B of the tax procedures act is meant to provide a one-off opportunity for Kenyan residents to declare assets and income and voluntarily repatriate the foreign-held assets to Kenya and invest in development of the country”
Applications, filings, and returns are to be made on the online KRA “itax” system before June 30, 2018. If funds are not brought in by that date, there is a five-year window (up to June 2023) to bring the funds back, but with an additional 10% of the amount repatriated as a penalty.
Married couples may file for the amnesty jointly, while assets and income that are in the name of minors can be declared by their parents or guardians. But anyone who had been assessed by KRA or was under investigation or audit over their income and assets prior to the amnesty is not eligible.
Companies this week looking for Kenyans to go work abroad
KBR, the global engineering & and construction subsidiary of the Haliburton Corporation, is seeking people to go work in the Middle East & Central Asia for a variety of positions including transport & maintenance, craft & trades, logistics, and management & administration. Apply online.
Cabin crew at Qatar Airways. Apply online by January 12.
Various jobs at Investments & Mortgages (I&M) Bank (Details should be here soon) including;
- General manager finance & corporate planning
- Manager risk management
- Relationship officers/managers
- Manager liability management (Nairobi)
- Manager finance & administration
- Human resource officer
- Credit officers (Nairobi)
- Compliance & quality assurance officer
- Management trainees (people aged 22 – 25 who have studied abroad in the UK, New Zealand, Australia & Canada are encouraged to apply)
Apply to the group human resource manager at email@example.com or p o box 30238-00100 Nairobi by April 25.
Website officer at the Kenya Anti Corruption Commission who will be in charge of day-to-day management and maintenance of a their site. Apply to the director, KACC p o box 61130-00200 by April 25.
The Electoral Commission of Kenya (ECK) is conducting a voter registration in preparation for the constitutional referendum. Unfortunately (for most of you who read this site), Kenyans in the Diaspora have not been considered. Still you can ask the ECK why at firstname.lastname@example.org. Or you can take an early summer holiday, as the deadline to register is May 30th.