Vivo Energy Investments B.V has reportedly engaged the services of investment banks as it eyes an initial public offering to strengthen its operations in Africa. According to people familiar with the matter, the offering will value the company at more than $3 billion as it moves to bet on the continents improving growth prospects.
Vivo Energy Africa Operations
The Netherlands based-energy company currently has operations in 16 African countries through which it distributes lubricants and liquefied petroleum gas. The company also operates more than 1,78o fuel stations under the shell banner.
Vivo Energy runs most of its business operations in South and West Africa. However, it also has stakes in Kenya and Uganda energy sectors, in addition to Morocco and Namibia. Retail and consumer fuel demand in the continent is expected to grow, mostly driven by the low-cost energy environment that has led to a spike in demand for energy products.
The proposed IPO seeks to take advantage of a rebound in commodity prices as well as Africa growing middle-class population that is driving energy demand. The Continents economy is poised to grow by 3.7% in 2018 presenting unique opportunities that Vivo Energy Investments hopes to take advantage of.
Vivo Energy could see its prospects in Mali, Burkina Faso and Ghana strengthened given that the countries’ economies are set to grow by between 5% and 8.9%. However, a push for an IPO by Vivo Energy could have a ripple effect on the continents energy sector.
By Going, public Vivo should be able to gain access to new capital which t can use to accelerate its growth and expansion plans in the continent.
Should Vivo succeed in the proposed IPO, then it could spur a bevy of activity from other companies also looking to take advantage of the strong equity markets. Reports indicate that the likes of Trafigura Group and Angola’s Sonangol Holdings and Puma Energy could also push for the capital markets by carrying out IPOs of their own.
A study by the PricewaterhouseCoopers indicates an increase in IPOs this year with European IPOs leading the foray. The London Stock Exchange accounts 36% of all IPOsin Europe compared to just 17% a year ago, as uncertain market climate conditions gripped various sectors. Proceeds from European IPOs more than doubled to €8.2 billion in the third quarter compared to €3.8 billion as of the same period last year.