Coca-Cola IPO Poised to Revitalize JSE Amid Recent Delistings

Producer News

Africa’s largest stock exchange, the JSE, has announced a robust lineup of new listings for the year, headlined by the much-anticipated initial public offering (IPO) of Coca-Cola Beverages Africa (CCBA). This comes as a welcome development for the exchange, which has experienced a significant number of delistings in the past seven years.

JSE Eager for Coca-Cola’s Market Debut

The JSE spokesperson confirmed that the multi-billion rand IPO of CCBA is scheduled for this year, although specific dates remain unannounced. This IPO is a key part of the exchange’s strategy to rebound from a challenging period marked by the departure of 22 companies last year and an average of 25 over the past seven years.

CCBA’s Listing Journey Amid Market Fluctuations

Initially planned for 2021, the CCBA listing has been delayed, with the company seeking favorable market conditions. Bloomberg estimates the value of the IPO at $8.1 billion. CCBA’s silence on the matter adds to the anticipation. Asief Mohamed from Aeon Investment Management highlights that CCBA is likely waiting for optimal market conditions to maximize its listing value.

CCBA: A Major Player in Africa’s Beverage Sector

Formed in May 2016, CCBA emerged from a merger of Coca-Cola Company’s Southern and East African bottling operations with SABMiller and Gutsche Family Investments. The company stands as Africa’s largest Coca-Cola bottler, contributing around 40% of the continent’s Coca-Cola sales and employing 17,000 people across 40 bottling plants.

Market Dynamics and the Timing of CCBA’s IPO

Makwe Masilela from Makwe Fund Managers notes that CCBA’s cautious approach to listing has been influenced by new market challenges, including increased competition and supply chain disruptions from the Covid-19 pandemic. The return to normalcy in the market may now offer a more conducive environment for the IPO.

JSE’s Evolution and Challenges in Attracting Listings

The JSE’s history, dating back to the gold rush of the 1880s, has seen significant shifts, including the high-profile delisting of De Beers in 2001. From over 600 companies, the JSE now hosts just under 300, facing criticism for its limited engagement with retail customers.

Global Factors Influencing SA’s IPO Climate

Bradley Preston from Mergence Investment Managers emphasizes that global IPO trends and interest rates are key factors affecting the South African listing environment. He points out that higher interest rates have led to reduced valuations for privately held businesses, slowing down new listings. The global IPO market and investor interest in emerging markets like South Africa will play crucial roles in reviving the JSE’s listing activity.

Preston also suggests that the potential listing of Stripe, a major player in online financial services, could be a bellwether for the global IPO market in 2024.