London: Following last weeks announcement, Afreximbank confirms its intentions to float on the London Stock Exchange to help facilitate and expand intra- and extra- African trade. Given the role of African Export-Import Bank in the African Continental Free Trade Area (AfCFTA), one of the largest free trade agreements after the WTO, this IPO allows the bank to stimulate the consistent expansion, diversification and development of African trade.
Following the announcement on 9 October 2019 by the African Export-Import Bank (“Afreximbank” or the “Bank”), a supranational financial institution whose purpose is to facilitate, promote and expand intra- and extra- African trade, of its potential intention to publish a registration document, the Bank hereby confirms its intention to proceed with an Initial Public Offering (the “Offer”) by issuing Global Depositary Receipts (“GDRs”), consisting of (i) a U.S.$250 million base deal size and (ii) a brownshoe option representing up to 15% of the base deal size. The GDRs are expected to be admitted to the standard listing segment of the Official List of the FCA and to trading on the Main Market of the LSE.
The final offer price (the “Offer Price”) in respect of the Offer will be determined following a book-building process, with admission expected to occur in November 2019.
The Bank’s mission is to stimulate the consistent expansion, diversification and development of African trade, particularly intra-African trade, while operating as a best-in-class, profit-oriented, socially responsible financial institution and a centre of excellence in African trade matters.
Professor Benedict Oramah, President of the African Export-Import Bank, said:
“I am delighted to confirm our intention to float on the London Stock Exchange. Afreximbank is well placed to capitalise on the opening up of trade across the continent and, with our experienced management team, we are confident we can deliver value for shareholders and customers. We look forward to presenting our growth story to investors.”
The Bank intends to apply for the admission of GDRs to trading on the Main Market of the LSE and to listing on the standard listing segment of the Official List of the FCA. Admission is expected to occur in November 2019 and will consist of a base deal size of $250 million, with a brownshoe option representing up to 15% of the base deal size.
The Offer is intended to be comprised of new GDRs to be issued by the Bank which will represent the Bank’s Class D ordinary shares.
The use of proceeds is expected to:
- Accelerate trade finance growth throughout Africa;
- Strengthen the Bank’s source of permanent capital to enable it to expand its lending activities;
- To meet the expected increase in demand for financing as a result of the projected growth of intra-African trade; and
- Broaden the Bank’s shareholder base.
Immediately following Admission, the Bank will permit exchangeability between the GDRs traded in London and its depositary receipts currently listed in the Mauritius, which will ultimately increase the effective free float.
The Bank intends to allocate the proceeds from the sale of up to 15% of the Offer for the purpose of conducting price stabilisation activities. If no stabilisation activities are conducted, such proceeds will be returned to the Bank; if stabilisation activities are conducted, the GDRs purchased through such stabilisation activities, together with any remaining allocated proceeds, will be returned to the Bank.
The Bank’s strategy is focused on four main pillars: Intra-African Trade, Industrialisation and Export Development, Trade Finance Leadership, and Financial Soundness and Performance.
The Bank, immediately prior to Admission, is expected to agree that (subject to certain exceptions), during the period of 180 days from the date of Admission, it will not, without the prior written consent of the Joint Global Co-ordinators (as defined below), offer, sell or contract to sell, or otherwise transfer or dispose of, directly or indirectly, or announce an offer of any Shares or GDRs (or any interest therein or in respect thereof) or enter into any transaction with the same economic effect as any of the foregoing.
For the six months ended 30 June 2019, the Bank’s profit was U.S.$137.6 million (2018: U.S.$75.5 million). As at June 2019, the Bank’s total assets were U.S.$15.4 million. For the year ended 31 December 2018, the Bank’s profit for the year was U.S.$275.9 million (31 December 2017: U.S.$220.5 million). As at 31 December 2018, the Bank’s total assets were U.S.$13,419.4 million (31 December 2017: U.S.$11,913.5 million).
The Bank has engaged J.P. Morgan Securities plc (“J.P. Morgan”) and HSBC Bank plc (together with J.P. Morgan, the “Joint Global Co-ordinators”) to act as Joint Global Co-ordinators and Joint Bookrunners and Exotix Partners LLP (trading as Tellimer) to act as Co-Lead Manager in the event the Offer proceeds. Afreximbank Advisory & Capital Market Department is acting as Financial Adviser.