Opportunities for companies looking to go public in Africa are expanding. Whereas a decade ago, there were only a handful of African stock exchanges, there are now at least 23. While many of them remain relatively small and dominated by a few large companies, interest from both foreign and domestic companies is rising. 

 Historically, many foreign companies operating within Africa have raised funds from foreign Initial Public Offerings (IPOs). For example, Ophir Energy, an exploration firm operating in East Africa with assets across the continent, raised millions from its IPO in London back in 2011. As far as “home-grown”, African companies go, the stock exchanges have been dominated by a handful of large companies (MTN provides a clear example of an African company dominating the Nigerian Stock Exchange). While locally owned companies have been raising funds through IPOs for a while on some stock exchanges, this movement has taken longer in other regions and industries.

This week, we are reminded of the gathering momentum behind IPOs on the African stock exchanges, and in particular those of locally-owned companies. Swala Oil and Gas (Tanzania) Plc became the first locally-owned oil and gas company to go public in East Africa, on the Dar Es Salaam Stock Exchange.  Swala holds assets in the world-class East African Rift System and is an affiliate of Swala Energy Limited, listed on the Australian Stock Exchange (ASX). The listing was approved by  the Tanzanian Capital markets and Securities Authority (CMSA) on 27th May 2014 and allows Swala to offer to the public up to 9.6 million ordinary shares, at a price per share of 500 Tanzanian Shillings ($0.3).

Local ownership and participation in exploitation of natural resources on the continent is an ideal that has been championed by Swala. David Mestres Ridge, the company’s CEO commented, “this is a great step not only for Swala but also for Tanzania and its people. Investing in oil and gas shares is a means for economic diversification for any individual and it allows interested parties to own a stake in a fast growing business.” Abdullah Mwinyi, a Swala director said, “There has been a great debate on the need for local content in this booming oil and gas industry. We are delighted that today Swala becomes the first oil and gas company to walk the talk”.

It will be interesting to see how successful “walking the talk” is for Swala and others going public in the region and across the continent. We shall observe the African stock exchanges with interest over the next few months for movement from both locally owned and foreign companies and the response of both domestic and foreign investors looking to buy into African companies.

Hannah Edmonds is a trainee associate in Covington’s London office.  She studied law at St Catharine’s College, Cambridge, the LLM in International Law at Bristol University and the LPC at BPP Law School.