JSE thirsts for Coca-Cola’s delayed mega-IPO

Africa’s biggest bourse has been hit by a swathe of delistings over the past seven years


The JSE, Africa’s biggest stock exchange by value, says it has a healthy pipeline of new listings this year, including the imminent initial public offering (IPO) of Coca-Cola Beverages Africa (CCBA).

The bourse told Business Day that the multibillion-rand IPO by CCBA is still on the cards this year, without giving a timeline.

“Yes, Coca-Cola is still in the pipeline for a JSE listing, and the bourse’s pipeline for 2024 holistically is healthy,” a spokesperson said.

The JSE has endured a torrid past seven years — 22 companies delisted last year and 25 on average over the period — and the potential influx of newcomers will go some way to replacing household names such as Mediclinic, Massmart and Pioneer Foods.

CCBA’s mooted listing, which Bloomberg has valued at $8.1bn, has been delayed since 2021 as the company waited for market conditions to improve.

CCBA did not respond to requests for comment.

Asief Mohamed, CIO at Aeon Investment Management, said there are several reasons for CCBA biding its time over a JSE listing.

“The SA stock market rating and comparable listed shares are trading at low valuation multiples. Coca-Cola Africa’s parent company will want to wait for a more opportune time to get a higher price,” Mohamed said.

“Coca-Cola’s CEO Jacques Vermeulen has reiterated their commitment to a listing at some point, suggesting they are simply waiting for the right conditions. It is also possible that CCBA is exploring alternative sources of funding that may better suit its current needs and objectives,” he added.

CCBA was formed in May 2016 after the Competition Tribunal conditionally approved the merger of the Southern and East African bottling operations of the nonalcoholic, ready-to-drink beverages businesses of the Coca-Cola Company, SABMiller and Gutsche Family Investments.

According to the company’s website, it is the eighth-largest Coca-Cola bottling partner worldwide by revenue and the biggest on the continent, accounting for about 40% of all Coca-Cola volumes sold in Africa. It employs 17,000 people at its 40 bottling plants.

Makwe Masilela, CIO and founder of Makwe Fund Managers, said CCBA has been responsible in gauging the
market before committing to a listing.

“They had to deal with new market dynamics like increased competition, which was partially due to supply chain issues resulting from Covid-19 bottlenecks,” he said.

“Earnings weren’t that attractive coming from Covid lockdowns. Capital markets also weren’t conducive to listing ... now we’re back to normality.”

De Beers’ delisting from the JSE in June 2001 was regarded as a blow to SA’s equity market, though the impact was cushioned by the diamond company remaining an unlisted subsidiary of Anglo American, which remains on the bourse.

When De Beers went private, the JSE was still the share trading platform for more than 600 companies. Now the exchange, which traces its roots to the discovery of gold in Gauteng in the 1880s, is home to just under 300 companies.

One of the criticisms levelled at the JSE is that it has largely been an institutional market that lacks deep penetration by retail customers.

Bradley Preston, CIO of Mergence Investment Managers, said the SA listing environment will continue to be influenced by the global IPO market and global interest rates.

He stressed that rising rates and bond yields have been a big challenge for IPOs as privately held businesses have had to revise down their valuations due to higher discount rates as bond yields increase.

“The result is that the venture capital firms, private equity firms and founders of these businesses are loath to list them at lower valuations than they held them at during the years of low interest rates. This has led to a sharp slowdown in new listings,” Preston said.

“The JSE also has its own issues and a real pick up in new listings would require more interest from global investors in emerging markets and SA in particular, but the global IPO market will remain a very important driver.”

Preston said it remains to be seen whether 2024 will see this market opening up again, though this will probably require more certainty on interest rate cuts from the US Federal Reserve.

“The potential big IPO this year is Stripe, which could set the tone for the rest of the year.”

Stripe, a San Francisco-based financial services company with a focus on online payments solutions, has hired Goldman Sachs and JPMorgan Chase to advise on the timing and details of an IPO.


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