Angola to test its stock market with BAI bank

By Estelle Maussion
Posted on Monday, 2 May 2022 09:53

BAI's institutional headquarters in Luanda © BAI

Listing part of BAI bank’s capital on the stock market is expected to prove that Angola’s economy can reform itself.

This is what is called a life-size test. Angola’s largest bank, BAI (Banco Angolano de Investimento), announced on 21 April that it would be launching the procedure to list part of its capital on the stock exchange.

This operation, the first one to take place in the country since the financial centre was inaugurated in 2014, is expected to mark a turning point in the economy’s modernisation efforts as well as demonstrate the success of the reforms undertaken by President João Lourenço. José Eduardo dos Santos’ successor, who is running for a second term in August, has prioritised developing the private sector and improving governance.

Symbolic operation

Scheduled to take place between 16 and 27 May, the IPO involves 10% of the bank’s capital, which is held by two shareholders and public behemoths, the national oil company Sonangol (8.5%) and the national diamond company Endiama (1.5%).

Sonangol is the largest shareholder with 8.5%, followed by Angolan business people and entities (each with 5% or less), Endiama and about 50 small shareholders.

The bank’s clients include the country’s major private players and public companies. Furthermore, it has a market share of between 15 and 20% in terms of loans and deposits, with liquid assets of $7.4bn in 2020. In February, the rating agency Fitch announced that it was upgrading the bank’s rating from CCC to B- (in line with the country’s rating upgrade).

Although no expression of interest from investors has yet been made public, the operation is symbolic in two ways. Firstly, it confirms that the public entities Sonangol and Endiama are refocusing on their core business, a move initiated by President Lourenço to make them more efficient.

Secondly, and most importantly, this operation is expected to mark the start of sales and purchases on the Angolan stock exchange, the Bodiva, which is a long-awaited step forward. Although the stock exchange project dates back to 2006, it only came into being in 2014. The start of the sale and purchase operations was initially planned for the following year.

Serial privatisations

If successful, the IPO of part of BAI’s capital should pave the way for several other similar operations. Meanwhile, the Angolan government has embarked on a vast privatisation programme that includes selling 195 holdings and companies over four years.

“The operation will be a milestone in the history of the Angolan financial market,” said Patrício Bicudo Vilar, head of the Institute for Asset Management and State Participation (Igape), the driving force behind the country’s privatisation plan.

According to the latest figures provided by the Angolan authorities, the plan has raised more than $2bn since it was launched in 2019, through the sale of 84 assets and companies.

“This listing is positive for the Angolan economy and marks a further step in its structuring,” said Daniel Ribant, a former banker who is familiar with the country. “The BAI is a serious institution and represents a good risk. Bodiva has found a reputable organisation,” he added. It remains to be seen who the buyers will be.

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