The backlog of IPOs on the London Stock Exchange just got even longer.
The African Export-Import Bank on Tuesday said it had put its planned flotation on ice, blaming “unfavorable market conditions.”
Just two weeks after telling investors it would go ahead with the listing, the Pan-African trade finance group, known as Afreximbank, said that despite “significant interest” from investors, it has decided to postpone its IPO “at this time.”
The decision will disappoint investors who had hoped to see IPO activity pick up in the fourth quarter, which is traditionally the most active season of the year.
It comes just weeks after Kaspi canceled its flotation, which would have valued the Kazakh fintech company at up to £5 billion, again citing market volatility, “particularly in the technology sector.”
Russ Mould, investment director at AJ Bell, the investment platform, said there are a number of possible reasons for African Export-Import Bank’s decision to postpone its IPO and many-if not all-have little or nothing to do with the company and are therefore largely beyond its control.
“Emerging markets and frontier markets aren’t performing particularly well, weighed down as they are by a strong dollar and soft commodity prices. In fact, emerging and frontier arenas have been relatively poor performers compared with developed ones over the past decade and they have therefore failed to fully compensate investors for the risk they have taken to get exposure,” Mould said.
Global trade tensions, geopolitical uncertainty and weak economic growth in the eurozone have all weighed heavily on investor sentiment for new listings, which was already undermined by the continuing Brexit saga.
That is even though the FTSE 100 Index is up nearly 10% from its 2019 closing low of 6692.66 in January this year.
The volume and value of U.K. IPOs were down by 77% and 80% respectively during the third quarter of 2019 compared with the same period last year, when 13 IPOs raised £1.7 billion, according to data from PwC.
The only significant offering came from Helios Towers , the African mobile networks operator that made its market debut in mid-October-almost 18 months after it first tried to launch an IPO. The Africa-focused telecom tower infrastructure company listed its shares at 115 pence and raised $364 million, valuing the company at $1.45 billion.
European equity markets aren’t doing much better. Earlier this month, Italian luxury yacht maker Ferretti pulled its IPO after saying the price investors were willing to pay didn’t reflect the company’s value. German property companies Domicil Real Estate Group and Logistrial also canceled their deals.