Will Angola’s first IPO open privatisation floodgates?

Angola could be looking at a stream of listings and capital raisings after Banco BAI, the country’s biggest private bank, successfully completed the country’s first initial public offering (IPO) of shares and raised 40.1bn Angolan kwanza (AOA) ($94m). 

The sale was for only 10% of BAI’s shares, which were sold by two of the biggest shareholders – state-owned Sonangol (oil producer) and Endiama (diamonds). 

According to Banco BAI, the 1.9m shares were priced at AOA20,640 kwanza ($48.36) each. The pricing was at the top end of the AOA17,200-20,640 price range that had been published for the shares. 

The offer was oversubscribed nearly 1.6 times, which is a triumph at a time when many share offers are being pulled back from global markets due to lack of investor confidence and global market turmoil. Foreigners were allowed to buy the shares. 

On 9 June, the bank’s shares were listed for trading on the Angolan stock exchange, the Bolsa de Divida e Valores de Angola (BODIVA). When trading started there were eight buy orders waiting at AOA21,650 each, but no sellers. BODIVA CEO Walter Pacheco said: “We come together today to witness the start of a new era for the financial system and the capital markets.”

This sets the scene for the first equity trades on the bourse, eight years after it was launched in 2014. The exchange has been trading government bonds and other debt, totalling $2bn in 2020. 

A boost for President João Lourenço?

As Angola prepares for its 24 August general elections for the president and National Assembly, the IPO and listing could boost the economic-reformer image of President João Lourenço. 

National economic plans include a modernisation drive and a bid to diversify the economy away from its reliance on oil and diamond exports, as well as to reduce the economic dominance of the government and attract foreign investment. The economy was in recession for five years but is expected to grow by 2.7% in 2022. 

Luis Lelis, BAI’s CEO, said: “This capitalisation opens strong opportunities for the future of BAI, to keep investing in our operations and in new business with more transparency and accountability.”

He said the bank may come back to market to raise more capital. 

Earlier BODIVA’s Pacheco had said the first IPO will launch a privatisation drive and a wave of listings. He said the government plans to sell its shareholdings in several companies including television and telecommunications provider TVCabo Angola, bank Caixa Angola, upstream oil company ACREP and fuel retailer Sonangalp: 

“All these companies revealed, publicly or privately, their ambition to list capital with BODIVA. The first IPO will be decisive to promote the market.” 

He added: “The market did not advance earlier because it was necessary for the state to reduce its direct intervention in companies and in the economy.”

The market is busy with rumours of other potential listings and IPOs, including privately owned airline Fly Angola, which resumed domestic flights in Angola last December after Covid-19 disruptions. 

The state could sell off 62 companies and other assets, while other estimates suggest 20 more IPOs could follow in the next few years. 

Pacheco had suggested that lenders Banco Caixa Geral Angola SA and Banco Millennium Atlantico would come to the market before the giant IPOs of Sonangol and Endiama. 

One of the biggest privatisations is likely to be an offer of 30% of the shares in Sonangol, which could take up to two more years to prepare and could also take place on an international exchange.