Flutterwave, the African fintech giant, is cautiously treading the path towards its Initial Public Offering (IPO) ambitions as the challenges faced by other African-born companies on global stock exchanges raise questions about the feasibility of a successful listing.
In 2021, after securing a remarkable $170 million in funding, Flutterwave’s CEO, Olugbenga Agboola, expressed interest in the possibility of listing in New York or considering a dual listing in both New York and Nigeria. However, recent struggles of African companies on international markets have cast a shadow over the anticipated success of Flutterwave’s IPO.
While an IPO is seen as a significant milestone for African startups, the track record of technology companies that ventured outside the continent, including IHS, CAB, Jumia, and Tingo, shows limited success.
Strive Masiyiwa, founder and chairman of Econet Group, highlighted the challenges faced by African companies listed on international markets, citing examples like Airtel Africa, IHS, CAB, and Jumia, which have seen significant declines in their market values.
Airtel Africa stands out as an outlier, experiencing growth since its listing on the London Stock Exchange in 2019. However, others like IHS, CAB, and Jumia have faced substantial declines in market capitalization, with some losing up to 83.54 percent of their initial value.
A closer look at the pioneers reveals that the challenges are not confined to specific industries. IHS Holdings, listed on the NYSE in 2021, has lost about 75 percent of its starting share value. Similarly, CAB Payments, a London-based payment processing and foreign exchange business, faced a significant decline in market capitalization, attributed to volatility in exchange rates in Nigeria and other West African countries.
Jumia, the e-commerce giant, has seen its market cap decrease from $1.94 billion in 2019 to $319.96 million, indicating a compound annual growth rate of -32.35 percent.
Despite these challenges, Flutterwave, known for processing over 550 million transactions worth over $32 billion and serving more than 2 million businesses across 34 African countries, seems poised for success as an IPO company. However, concerns about corporate governance loom large.
Experts suggest that while Flutterwave’s business model is strong, the company’s corporate governance issues must be addressed before going public. The recent resignation of Oneal Bhambani, the CFO, and allegations of misconduct and investigations by the US Securities and Exchange Commission (SEC) have raised questions about the company’s readiness for an IPO.
In response to these concerns, Flutterwave stated that Bhambani left to pursue new opportunities, and Israel Koledowo, head of finance for Africa, will lead the finance department on an interim basis.
As Flutterwave navigates its way towards an IPO, the spotlight on corporate governance becomes more critical. Investors are expected to demand transparency, and any infractions may be less forgiving, especially considering the scrutiny faced by fintech companies in global markets.
The road to IPO for Flutterwave appears promising from a business perspective, but the journey ahead will require careful navigation of governance challenges to ensure a successful listing on the global stage.