Africa’s biggest bourse, the JSE, is slowly turning the tide from a wave of delistings to companies once again considering initial public offerings.

Bankers cited potential interest rate cuts, South Africa’s upcoming election and the country’s plans to alleviate rolling blackouts among factors for the revival. JPMorgan Chase & Co said the bank was seeing more companies preparing to come to market in Johannesburg.

“We are seeing a significant increase in capital market activity in 2024 and the pipeline for 2025 is also looking strong,” said Edward Bell, JPMorgan’s Johannesburg-based managing director. “This compares to the last two years of very muted activity, not just on the continent, but globally.”

The JSE saw just two IPOs last year, according to data compiled by Bloomberg. And while it saw 11 delistings in 2023, the trend appears to be slowing this year with two delistings so far. JSE CEO Leila Fourie anticipates as many as ten listings in 2024. “We are optimistic it is looking better, but we’re cautiously optimistic,” she said.

South Africa has entered the new year more optimistically after years of underconfidence in its economic recovery, exemplified by a wave of delistings from the JSE. Inflation is easing and growth expectations have doubled - albeit from a low base - and crippling power cuts are expected to ease within the next two years.

Africa’s most-industrialized economy will also hold its most important election since the dawn of its democracy 30 years ago, with the ruling African National Congress expected to lose some support.

“Foreign capital is watching the 2024 elections carefully,” said Goldman Sachs Group’s CEO for South Africa Simon Denny. “A combination of a stable election outcome, declining interest rates and more certainty around energy security should be very positive for our equity market.”

Companies are mostly planning spinoffs and carveouts in the next few months as part of their listing plans, bankers said. Conglomerates want to unlock value from profitable subsidiaries by unbundling them, raising capital and deleveraging stretched balance sheets, said Stephen Nyakudarika, investment banking advisory and origination director for Deutsche Bank.

Cannabis firm Cilo Cybin Holdings Ltd. revived IPO plans this month, Transaction Capital plans to unbundle its WeBuyCars unit in April, Pick n Pay Stores has plans to spin off its discount supermarket chain Boxer, and RCL Foods will spin out its Rainbow Chicken business.

One of the more highly anticipated listings is Coca-Cola Beverages Africa, on ice for three years due to unfavorable conditions. The plan is to list on Euronext, with a secondary listing on the JSE. Bloomberg previously reported that the listing could be valued at as much as $8 billion.

“Next year, we expect more traditional IPOs with companies seeking to list with a view to raise permanent capital and as a partial exit mechanism for shareholders,” said Nyakudarika.

The JSE has tried to cut red tape, and now allows secondary listings for companies primarily listed on the Hong Kong Exchanges & Clearing, said Patrycja Kula-Verster, the bourse’s primary markets business development manager.

JPMorgan’s Bell pointed out that capital markets have returned globally, and typically emerging markets and South Africa follow the US, UK and Europe.

Bankers said interest for IPOs could come from sectors including consumer, resources and industrials, financial services, fintech and digital infrastructure.

Outside of South Africa, other African companies looking to raise equity capital have tended to prefer an offshore listing, typically NYSE, LSE, or Euronext rather than the JSE. That’s down to greater liquidity on those markets, and a larger pool of investors who understand and have investment mandates for emerging markets, said Nyakudarika.