Analysts at PricewaterhouseCoopers say they expect to see increased Initial Public Offering activity in the technology and health sectors in the coming months.
The consulting firm, in the September edition of its Capital Markets Watch, said the growing interest of companies in these sectors are fuelled by the current market sentiments.
“We expect to see issuers in the tech and healthcare space take advantage of the current market sentiments as more companies within these sectors continue to prepare for an IPO,” the report stated.
PwC’s Capital Markets Watch is an annual report that focuses on equity and debt capital markets transactions in Africa.
Analysts at PwC linked the investors’ confidence to some of the initiatives introduced to attract fast-growth companies and start-ups to the capital market, one of which was the launching of the Growth Board earlier in the year.
The Growth Board, according to the company, aims to address the shortcomings of the Alternative Securities Market by offering more flexible listing options, relaxed eligibility requirement, and less regulatory burden in terms of post-listing obligations.
For instance, it said companies with market capitalisation of as low as N50m with a minimum of 25 shareholders could be eligible to list its shares on the Growth Board.
“As the global markets recover from the initial shock of COVID -19, which created extreme market volatility in Q1 2020, there has been renewed issuer and investor confidence with a surge in IPO activity in developed markets, especially in the United States and China,” PwC report stated.
“As witnessed in the global markets, the Nigerian equities market is gradually recovering from the impact of COVID-19, albeit more slowly.
“Despite the recoveries noted, there are still uncertainties around the speed of global economic recovery.”
The report stated that the US presidential elections in November 2020 and the Brexit transition in December 2020 were some factors that might impact global market performance.
In Nigeria, the company predicted a quiet primary market activity in the short term due to current macroeconomic concerns and blurry economic outlook.
According to the consulting firm, market-led initiatives introduced within the year will encourage more companies, especially start-ups to explore the opportunity of accessing the capital market for long-term funding.
Also, corporates will continue to take advantage of the low-interest rates and the huge market demand for relatively higher yields in the bond market, PwC said.
Given that market conditions are highly unpredictable, the company said time to market was very important for corporates wishing to capitalise on this window of opportunity.