African Coca-Cola bottler’s $3 billion IPO delayed by unrest in Ukraine

Coca-Cola’s estimated $3 billion initial public offering (IPO) for its African bottling unit will likely take place in the third quarter after market turmoil related to the war in Ukraine upended listing plans earlier, three sources said Tuesday, May 3.

Source: Reuters/Carlos Garcia Rawlins/file photo

The Coca-Cola Beverages Africa (CCBA) IPO would be the largest on the Johannesburg Stock Exchange since at least 2016 and a major boost for the flagging index.

But Moscow’s invasion of Ukraine has shaken investor confidence and contributed to a slump in IPO volumes in Europe, the Middle East and Africa, as rising commodity prices and the supply chain disruptions undermine growth and challenge valuations.

Two sources directly involved in the IPO said Reuters that Coca-Cola had aimed to list CCBA early in the second quarter, but that schedule had slipped by the end of the third quarter. “It was widely expected to be the second quarter, but it was also subject to market conditions,” one of the sources said. “The idea is to do the IPO when there’s a lot more predictability.”

The sources asked not to be named as they were not authorized to speak publicly about the IPO.

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CCBA, Coca-Cola’s largest African subsidiary, based in Atlanta, announced in April last year that it would simultaneously double up in Amsterdam and Johannesburg within 18 months.

The CCBA said it was unable to comment beyond its April 2021 announcement to target an IPO within an “18-month period subject to market conditions.” Coca-Cola, which owns 66.5% of CCBA’s capital, did not respond to a request for comment.

Coca-Cola Hellenic Bottling Company

A second source involved in the IPO said CCBA’s European peer Coca-Cola Hellenic Bottling Co was used as a benchmark for the African Unity valuation due to its broad exposure to developing markets.

“Coca-Cola Hellenic has seen its P/E (price-to-earnings ratio) multiples drop since Russia attacked Ukraine, and its stock price has fallen sharply,” the source said.

The Swiss-based company, Coca-Cola’s third-largest bottling unit, operates in 29 European and African countries and counts Russia and Nigeria as its two largest markets.

The Russian Federation and Ukraine account for almost 20% of its business and it has lost almost a third of its market value since mid-February amid growing concern ahead of Ukraine’s invasion of Ukraine. Russia on February 24.

Its 12-month forward P/E, an indication of how much investors are willing to pay for its future earnings, plunged from an average of around 20 to around 12.

Coca-Cola's Bruno Pietracci talks about African optimism and new ways of working

Even before the war in Ukraine, the JSE, which is worth just over $1 billion, struggled to attract new IPOs, due to the weak South African economy. Companies have instead opted for listings in London or Amsterdam. Some 45 companies have left the exchange in the past two years.

Global IPO proceeds fell 58% in the January-March period, compared to the first quarter of 2021, while listings fell 38%, according to Refinitiv data.

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