Exclusive-Coca-Cola African bottler’s $3 billion IPO delayed by Ukraine turmoil -Breaking
Emma Rumney, Promit Mokherjee
JOHANNESBURG, (Reuters) – Coca-Cola’s initial public offering (IPO), of $3 billion for its African bottling business (NYSE:) is expected to take place during the third quarter. This will be after the market turmoil caused by the conflict in Ukraine has impacted plans to list earlier. Three sources confirmed this Tuesday.
Coca-Cola Beverages Africa (CCBA), the largest flotation on Johannesburg Stock Exchange since 2016 would provide a significant boost to the index.
Moscow’s invasion and occupation of Ukraine have shaken investor confidence. This has led to a decline in IPOs across Europe, Africa, and the Middle East. Rising commodity costs and disrupted supply chain disruptions are causing a slowdown in growth.
Two people who were directly involved with the IPO informed Reuters that Coca-Cola had hoped to list CCBA in the second quarter. However, that timeline was pushed back to the third quarter by a lapse in technology.
According to one source, “It was widely expected that it would be Q2, but market conditions were also a factor.” The idea behind the IPO is to make it more predictable.
Sources requested not to be identified because they weren’t authorized to talk publicly about the IPO.
Atlanta-based Coca-Cola’s largest African subsidiary, CCBA declared in April 2013 that it would double-list in Amsterdam as well Johannesburg in 18 months.
CCBA indicated that they were unable to comment beyond their April 2021 announcement regarding an IPO target in 18 months subject to market conditions.
Coca-Cola holds 66.5% of CCBA and did not respond when asked.
Another source said that CCBA’s European counterpart Coca-Cola Hellenic Bottling Co was used to benchmark the African unit’s value due to its extensive exposure in developing markets.
According to a source, “Coca-Cola Hellenic saw its earnings multiples (price-to-earnings ratios) fall since Russia attacked Ukraine and has had its share prices drop heavily.”
Coca-Cola’s third-biggest bottling company, based in Switzerland, has operations in 29 European and African nations and considers Russia and Nigeria its biggest markets.
Its businesses are almost 20% in the Russian Federation and Ukraine. Since mid-February, it has seen a nearly threefold drop in its market value as a result of growing concern about Russia’s incursion into Ukraine.
The forward P/E for the next 12 months, which is an indicator of how much investors will pay to acquire future earnings, fell from around 20 to 12.
The weak economy of South Africa meant that the JSE was unable to attract new IPOs even before the Ukraine conflict. Listings in London and Amsterdam have been preferred by companies. In the past two years, 45 companies left the exchange.
According to Refinitiv data, the global IPO proceeds fell 58% between January and March 2021 and the first quarter 2021. However, the number of listing fell 38%.