FSE Listings

The Time Is Now to Invest In South Africa and Africa in General

Africa has seen an enormous increase in investment capital in the last 5 years, and more money means more building. One of the bitter ironies of the global financial crisis is that even the most risk-averse institutional investors who sustained devastating losts focusing on developed markets have been taking more risks in search of growth rates that are hard to find in Europe and the US.

Private capital flows to emerging markets will balloon to $833 billion this year from $581 billion in 2009, according to the Washington-­based Institute of International Finance.

World Bank Vice President for Africa Obiageli Ezekwesili a few weeks past said from the London Stock Exchange, that investors worldwide need to invest in Africa and its budding capital markets. She urged investors who are in search of the right market at a time of growing fears of a global recession to “rediscover Africa”.

The reaility is that she is right, and that from Bonds, Debts, Equity Placements, and solid domestic products, Africa is in for a Boom Market.

Africa is experiencing GDP growth rates, and the projections are to increase year on year roughly 5%  or more to 2013. Building African focused businesses and listing African based companies on the Frankfurt Stock Exchange is one of the best routes to go as the focus is on Africa Capital Markets while other markets go into their worst quarters and Africa are among the best returns on investment. South Africa continues to be the strong growth market in Africa, with the Sub Saharan-Africa being an attractive market to invest in, including Uganda, Tanzania, and Nigeria.

Oxford University Professor, Paul Collier, which found the return on capital for over 950 African enterprises to be on the average 11 percent higher than in Latin America and Asia, and 70 percent more profitable if compared against similar Chinese firms.

When is the best time for African companies to go public and gain global awareness and access to capital? When you are winning the beauty contest in capital markets, and now is the time to list your African businesses more than anytime before.

African investment opportunities are ideal for European Investment markets, who are familiar with having made more capital investments into Africa directly in the past. In addition, China and Korea are investing heavily in Africa. The most common market with the largest cross section of investors from Foreign Markets is the NYSE-Deutsche Boerse Group and the Frankfurt Stock Exchange of which the group owns.

Why the Big African Boom?

Deregulations in the emerging markets in general starting in the 1990’s has lead to friendlier and more profitable markets of which businesses, consumers, investors, and development partners are bullish. Changes in policies, from reserve controls and foreign ownership to methods of protecting foreign investors through insurance and bonds, developing Countries and Africa are seeing more money.

More money means more building. Building of businesses, building of infrastructure, building of educated workforces, creation of jobs, and access to resources and growth; Africa has the building blocks.

African stock markets however still have limited liquidity and relative small size, African companies and South African companies need to look beyond just Africa and look to Frankfurt for primary and or dual listing of their firms to take advantage of the boom and momentum of international investment focus on Africa.

It is true African Stock Exchange, with the exception of the Johannesburg Stock Exchange have been doubling their market capitalization from 1992 to 2002, with markets like Lagos Stock Exchange bullishly boasting plans to bring its capitalization of $40 billion to $1 trillion in five years.

However, it is difficult to look past the illiquid markets of African Capital Markets compared to the liquid Private Equity investments into African companies listed on Foreign markets.

Africa has invested in change, now is the time to change the investors mind and bring the foreign capital in to the structure that has been built for them.

Opportunities are abundant for:

–          Agriculture, agribusiness, agro-processing

–          Infrastructure development and construction, transportation, and logistics

–          Resources and Energy

–          Upgrade and penetration within the ICT sector, expanded broadband, mobile networks, banking, and internet access

–          Business to business services

–          Water purification, desalination, and transmission

Africa has the distinct opportunity of luring some of the 85-90 million labor intensive jobs in light manufacturing that China will likely move offshore in the next 3-5 years from wage pressure.

Africa is not afraid to make public capital investments and utilize aid funds to enable reforms and capital infusions into telecommunications, infrastructure, and logistics so that private capital can help turn the loss-making progress initiatives into profitable projects taken to their full capacity of capital earnings.

Why Invest In South African Businesses and Trade?

In this global market, there has been a great deal of attention given to the African footprint of the BRIC economies and the fact that South Africa is the predestined main trade, investment, and political partner for Sub-Saharan Africa. It’s economic structure, location, participation in multilateral trade agreements (SADC Region), and stable domestic capital market are the favorable conditions South Africa brings to the table.

In addition, the rest of Africa believes this rumor, and it’s a good one. In actual fact, much of the Entrepreneurship in the African Continent at one time or another has seeked capital within South Africa, traded with South Africa, or has looked at opportunities to grow into South Africa. South Africa trades with Africa, providing technology intensive product and receiving resource-based products in return.

Further harmonization between the SADC and the Common Market for East and Southern Africa and the East African Community will only continue to grow the opportunities.

High growth markets of African Countries or projects focusing on feeding the South African business opportunities include:

–          Energy companies and the supply of energy to South Africa

–          Oil, precious stones, base metals

–          Agricultural products

In general, African investments into these sectors are stable for both domestic and international consumption.

South Africa profits from the relationships in its neighboring markets though specialized manufacturing, machinery, vehicles and electronics, and to some smaller degree oil and agricultural products. South Africa tends to cater to African tastes for customized machinery, and this extends their growth into the markets, despite international competitors.

As mentioned prior, the booms happen years after and during deregulation and friendlier business environments that are the disruptive changes in economics that allow for higher returns than other markets globally. Some good suggest that plans for this Africa-wide free trade area covering 26 nations as negotiations continued and the structure eventually may unfold, that this could be a positive change to further create the boom in Pan-African business opportunities. This continent is no longer an emerging market by definition, but rather a Frontier market with young populations, high growth, and diversity.

With this high growth potential, Financial Services companies within South Africa and Africa in general will become attractive investments, as suggested by the World Bank Vice President who pushed on London for investment into Africa’s Capital Markets. The opportunities need to be financed and steered so that the growth is manageable and effective. Public company vehicles also allow for good governance, process, and status internationally. Listing your firm on the Frankfurt Stock Exchange or your business opportunity gives the company access to much needed capital from foreign markets.

In our opinion, South African businesses are the likely port of entry for investors interested in the continent, despite other emerging markets or the local Capital Markets. The businesses themselves, the equity, and the secured investments. In order to access capital, secured and insured investments, and international exposure, the Frankfurt is one of the leading sources for your firm to reach all three.

Financing of Afican Companies Listed On Frankfurt

Cashflow companies that can service debt or return on investment to shareholders with growth would be eligible for listing Bonds, Securitized Loans, and Structured Financing. On occasion the assets of firms are not enough, and the insurance firm and Banks issuing the Bond require collateral above and beyond the asset to fast track capital. By listing a firm on the Frankfurt Stock Exchange with FSE Listings Inc, you can utilize the listed companies shares in conjunction with the company’s assets as liquid security, improving both the chance of getting the required funds and increasing your rating to a AA Rating. Firms who work with FSE Listings Inc are willing to insure and finance African focused companies up to 5 million euro who fit the criteria for funding.

About FSE Listings Inc

FSE Listings Inc is the leading listing firm for the Frankfurt Stock Exchange listings outside of Germany and the recognized leader bar-none over any other firm for non-German Companies. With offices in Spain, UK, South Africa, Guatemala, Mexico, Canada, the USA, Netherlands, Vietnam, Hong Kong, Philippines, Thailand, Mozambique, and Ireland. Many firms have in-house law firms, which increase your cost of listing and hinder your process, FSE Listings Inc utilizes the best and quickest law firms, listing partners, designated sponsors, and local service providers. In addition, our finance partners have the access to innovative proven mechanisms of getting the capital and commitments your firm requires in a timely and reliable fashion.  By going with our firm, you get all of the best professionals as a one-stop service agreement. http://www.fselistings.com