From Egypt via Dubai to New York: Swvl (ISIN: KYG7315C1015), a bus-hailing service valued at USD 1.5 billion, had a successful IPO on the tech-heavy exchange Nasdaq last Thursday. Swvel was established in 2017 in Egypt’s capital of Cairo. Since then, however, Co-Founder and CEO Mostafa Kandil has moved Swvel’s headquarters to Dubai. Kandil is a familiar face in Germany’s tech scene, having previously served as head of operations at Rocket Internet (ISIN: DE000A12UKK6), a Berlin-based investor in tech start-ups.
During its IPO on Thursday, Swvl’s shares opened at USD 9.95 apiece, before falling 5% to USD 9.38 apiece the following day. Its listing was realised through a merger with a US-based special purpose acquisition company (Spac), namely Queen’s Gambit Growth Capital. Prior to the IPO, Swvl had raised roughly USD 70 million as part of a “pipe” (private investment in public equity) deal.
Swvl offers bus transport and business transports in around 100 cities and 20 countries. With Swvl’s mobile app, passengers can reserve seats on private busses operating on fixed routes. Fares are paid via the app. So how are the start-up’s fundamentals? For the third quarter of 2021, Swvl reported revenues USD 16 million – an increase of almost four-fold compared with the year earlier. Its operating loss as measured by adjusted EBITDA totalled USD 14.5 million (the company did not give any comparison and did not say what it adjusted in the EBITDA).
Following the IPO of music streaming platform Anghami (ISIN: KYG0369L1014), Swvl is the second Arab technology company to be listed on the Nasdaq. Anghami, based in Abu Dhabi, went public via a Spac on the Nasdaq last February.
We know few African fund managers who bet as big on North American mining companies than Malek Bou-Diab. Bou-Diab, who manages the equity fund Bellevue African Opportunities (Lux) (ISIN: LU433847323 for the institutional EUR tranche) has 31.9% of the fund’s assets in commodities companies, many of which are based in North America.
Canadian mining company First Quantum Minerals is the fund’s biggest holding, accounting for 7.2% of fund assets (total volum of the fund: EUR 57 million). First Quantum operates mines in Zambia – but also in Panama, Finland, Turkey, Spain, Australia and Mauritania. Ivanhoe Mines (ISIN: CA46579R1047), also based in Canada, specialises in the mining of minerals like for example those in the Central African copper belt. Ivanhoe accounts for 4.8% of the Bellevue fund. Other major holdings include US oil and gas producer Kosmos Energy (ISIN: US5006881065) and Canadian gold mining company B2Gold (ISIN: CA11777Q2099).
Strangely, the fund’s geographic breakdown mentions neither the US nor Canada even though the two countries represent at least 20% of the fund’s investments. Instead, the Bellevue fund merely mentions the markets of South Africa, Morocco or Egypt. Although the markets of Mali, Burkina Faso and Rwanda are also listed, these are not among the heavyweights in terms of African capital markets.
We have no problem with a fund that invests in companies which operate in Africa but are headquartered elsewhere . For the sake of transparency, however, we would prefer that the fund mentions this important fact. Leaving aside this cosmetic blemish, we expect the Bellevue fund to recover quickly from its relative underperformance in the past four years. This is because its strong bias toward oil and mining companies should pay off, as prices for such commodities continue to rise.
You may have noticed that we do not rely on chart analysis to track stocks. We prefer to give assessments of their economic fundamentals. Today we are making an exception: The share of Kap Industrial Holdings (ISIN: ZAE000171963), a South African logistics services firm, has been trading between ZAR 3.90 and ZAR 5.00 for months. But three weeks ago, the share started on an uptrend that took it 15% higher to ZAR 4.88 (EUR 0.30) from ZAR 4.19. The chart analysis suggests more upward momentum.
But as fundamentalists – just for stock analysis mind you – let’s have a look at its figures. Last Tuesday, the Kap Industrial announced promising results for the financial year ending 30 June without giving detailed figures up to now . Most of the company’s holdings are performing quite well. And with a price-to-earnings (P/E) ratio of 7.13x, its share is not overvalued.
We have repeatedly criticised the reluctance of Europeans to help Africa develop its capital markets. It seems our criticisms are not falling on deaf ears. Consider that the stock exchanges of Rwanda and Luxembourg have just signed a cooperation agreement. Under the agreement, the two exchanges aim to promote orderly financial markets, develop new products and may introduce a dual-listing scheme in the future.
As much as we welcome the agreement, we are not sure how important it is to Luxembourg. On the website of the Luxembourg Stock Exchange, we have not yet found any reference to this cooperation. Hmm – why is that Luxembourg bourse?
London’s bourse has long since entered Africa: In 2014, the London Stock Exchange (LSE) signed a partnership agreement with Casablanca Stock Exchange. And in 2019, the LSE partnered with the Ghana Stock Exchange to develop the capital markets in the country. Hopefully, these partnerships are a sign of things to come.