Finance

EXCLUSIVE Coca-Cola African bottler’s $3 billion IPO delayed by Ukraine turmoil

  • IPO anticipated in Q3 to boost as much as $3 bln
  • Listings had been deliberate for early Q2, sources mentioned
  • Battle in Ukraine creating uncertainty in fairness markets

JOHANNESBURG, Might 3 (Reuters) – Coca-Cola’s estimated $3 billion preliminary public providing (IPO) for its African bottling unit will doubtless happen within the third quarter after market turmoil linked to the struggle in Ukraine upset plans to checklist earlier, three sources mentioned on Tuesday.

The flotation of Coca-Cola Drinks Africa (CCBA) can be the largest on the Johannesburg Inventory Change since no less than 2016 and a significant increase for the flagging index.

However Moscow’s invasion of Ukraine has shaken investor confidence and contributed to a plunge in volumes of IPOs in Europe, the Center East and Africa as rising commodity costs and disrupted provide chains undermine development and name valuations into query.

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Two sources immediately concerned within the IPO instructed Reuters that Coca-Cola had aimed to checklist CCBA early within the second quarter, however that timetable had slipped to late within the third quarter.

“It was broadly anticipated to be Q2, but it surely was additionally topic to market circumstances,” mentioned one of many sources. “The thought is to do the IPO when there’s much more predictability.”

The sources requested to not be named as they weren’t authorised to talk publicly concerning the IPO.

Atlanta-based Coca-Cola’s largest African subsidiary CCBA introduced in April final yr that it might dual-list in Amsterdam and Johannesburg concurrently inside 18 months.

CCBA mentioned it was not in a position to remark past its April 2021 announcement to focus on an IPO in an “18-month interval topic to market circumstances”.

Coca-Cola (KO.N), which holds 66.5% stake in CCBA, didn’t reply to a request for remark.

A second supply concerned within the IPO mentioned CCBA’s European peer Coca-Cola Hellenic Bottling Co (CCH.L) was getting used because the benchmark for the African unit’s valuation due to its broad publicity to creating markets.

“Coca-Cola Hellenic has seen its P/E multiples (worth to earnings ratio) drop since Russia attacked Ukraine, and its share worth has come down closely,” the supply mentioned.

The Switzerland-based firm, Coca-Cola’s third greatest bottling unit, operates in 29 European and African international locations and counts Russia and Nigeria as its two greatest markets.

The Russian Federation and Ukraine account for almost 20% of its enterprise and it has misplaced almost a 3rd of its market worth since mid-February as concern mounted forward of Russia’s invasion of Ukraine on Feb. 24.

Its 12-month ahead P/E, a sign of how a lot buyers are able to pay for its future earnings, has plunged from a mean of about 20 to round 12.

Even earlier than the Ukraine struggle, the JSE, which is value simply over a $1 trillion, struggled to draw new IPOs, due to the weak point of South Africa’s economic system. Corporations have as an alternative opted for listings in London or Amsterdam. Some 45 corporations have exited the trade within the final two years.

Proceeds raised by IPOs globally fell by 58% within the January-March interval, in comparison with the primary quarter of 2021, whereas the variety of listings fell by 38%, Refinitiv information reveals.

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Reporting by Promit Mukherjee and Emma Rumney; extra reporting by Lucy Raitano; Modifying by Joe Bavier and Barbara Lewis

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