HARARE – The market capitalisation of Africa’s top 250 companies can be greatly enhanced by the entry of the continent’s giant State-run firms onto the region’s stock exchanges after privatisation, according to a new report by African Business.
It says Africa’s top 250 firms’ market capitalisation, valued at US$748 billion as at March 31, 2019, would be bolstered by privatisation and listings of giant State outfits in countries like Ethiopia and Angola, which have huge embedded value.
The report was released early this month, with Johannesburg Stock Exchange listed technology giant, Naspers topping the league of Africa’s biggest companies.
In ranking Africa’s Top 250 biggest companies, the report looked at the market capitalisation of shares listed on a stock exchange.
This was then expressed in United States dollars as at March 31, 2019, according to the report released early this month.
“The Top 250 ranking misses companies which are not listed, including some mining and oil groups such as Algeria’s state-owned oil and gas company Sonatrach (turnover US$33 billion in 2017), Angolan counterpart Sonangol (turnover US$7,7 billion in 2016), diamond miner Debswana in Botswana and South Africa’s troubled utility Eskom,” said the report.
“These parastatals would have high valuations, as we have seen recently when Saudi Arabia’s oil and gas giant, Aramco, opened its books to show profits of US$111billion, more than Apple, Microsoft and Amazon combined. Progress on the Angolan stock exchange and plans to introduce an Ethiopian exchange by 2020 with a wave of privatisations could widen the range of big listed companies in future surveys,” noted African Business.
It said Naspers, which has been reviewing its business to enhance shareholder value, has a US$104 billion market capitalisation at the end of March, although this value was down by US$3 billion on the previous year’s survey of US$107 billion.
Naspers was ahead of second placed Switzerland-based Richemont, which was placed second with a US$35 billion market capitalisation.
Richemont controls several of the world’s leading luxury goods companies, with particular strengths in jewellery, watches and writing instruments.
However, its origin lies in South Africa’s Rembrandt Group, where it is also listed on the JSE.
The report said Richemont’s market cap leapt by 17 percent on the previous survey last year, with its global sales and a primary listing on the London Stock Exchange galvanising it from an erosion of the South African rand’s value.
Mining giant, Anglo American, was ranked third, up from fourth position last year, after “productivity improvements in the underlying operations and better than expected prices for many of our products” helped its climb, the report quoted Richemont chief executive officer (CEO) Mark Cutifani, as saying.
South Africa based financial services group, Firstrand was in fourth place, with a market capitalisation of US$26 billion.