According to several sources, a further postponement of the IPO of the African subsidiary of Coca-Cola, based in Port Elizabeth in South Africa, is looming. The reason put forward is, this time, the war in Ukraine.
It has now been fourteen months since Coca-Cola Beverages Africa (CCBA) announced an initial public offering (IPO) in South Africa. But several postponements have fueled rumors in the financial sector.
Successive postponements without real explanations which above all made it possible to avoid an unfavorable IPO for the branch of the American soda giant. By taking its time, what is Coca-Cola really looking for?
CCBA had fled Belgium, then Turkey, so as not to be swallowed up by InBev, then by the Turkish subsidiary Coca-Cola İçecek. Since landing in South Africa, the African subsidiary of Coca-Cola has come up against South African laws on the 20% quota for non-white investors, which is mandatory to attempt an IPO.
Having spent the bulk of 2021 setting up its troops for this risky IPO – Coca-Cola owns 68% of CCBA – CCBA will be forced to postpone its stock market listing again. According to sources who confided in the Reuters agency, the instability of the world market, due to the Ukrainian crisis, would be the main reason for this new postponement.
Coca-Cola Africa, between a rock and a hard place
Indeed, global IPO revenue fell 58% in the first three months of 2022 from a year earlier. The activity of intermediaries has deteriorated by more than a third. In South Africa, around 2020 companies left the Johannesburg stock exchange between 2022 and XNUMX already, preferring listings abroad. This is not likely to improve with the global gloom in financial markets.
For Coca-Cola, its stock price has fallen around the world since the start of the Russian-Ukrainian conflict, with the American giant counting Russia as one of its biggest customers. In effect, Coca-Cola Hellenic Bottling Company (HBC), the conglomerate's second-largest company, based in Switzerland, relied on its Russian assets to cover its exposure in 29 European and African countries.
Coca-Cola HBC is also the majority shareholder of the African subsidiary. Which means that, for the conglomerate, attempting an IPO in South Africa would make it run the risk of a domino effect, potentially with the loss of the Swiss branch, therefore.
Coca-Cola therefore finds itself between a rock and a hard place. The listing process on the stock exchange can no longer be stopped. Started in February 2021, it was to last, at most, 18 months. CCBA therefore only has four months left to launch its IPO or try its luck elsewhere. Any delay in the offering will deprive Coca-Cola, according to South African law, of receiving the estimated $3 billion in proceeds from its IPO.