Tunisia is struggling with rising inflation, a big external deficit and an uncertain political outlook. These obstacles did not deter local businessman Mohamed Frikha from launching an initial public offer of shares in his fledgling carrier Syphax Airlines last week.
Syphax, founded in 2011, operates three planes, competing with state-owned flag carrier Tunisair. The IPO, which will run until May 20, aims to raise 25 million dinars ($15.5 million). Frikha said he was encouraged to list the airline on the local stock market by his success in 2011 in listing Telnet, a software and technology consulting firm.
Over two years after Tunisia's revolution ushered in an era of political and economic instability, the Syphax IPO points to an encouraging trend for the economy: the gradual revival of the stock market as a place for companies to raise money.
Three companies have conducted IPOs so far this year - a technology consulting firm, a cheese maker and a garment producer - compared to two in all of last year.
Mohamed Bichiou, general director of the Tunis Stock Exchange, says 15 more firms have applied to conduct IPOs, which should bring the number of listed companies up to 75 by the end of 2013.
If this expectation is borne out, the listings could in the long term help to boost growth of the economy. Moez Joudi, a financial analyst and economics professor in Tunis, estimates banks still provide nearly 85 percent of funding for Tunisian companies - a dependence which constrains the companies and poses risks for the banks. In addition, a string of IPOs would send a powerful signal of returning confidence in Tunisia, by showing that businessmen were willing to entrust their firms to the stock market and investors were ready to stump up their money.
Though still in its early stages, the revival of IPOs in Tunisia contrasts with neighbouring Egypt, another economy hit by instability after a 2011 revolution. There, equity issuance has largely ground to a halt since the revolution, and some businessmen have been taking steps to delist their firms from the stock market, potentially to move their wealth abroad. The last two years have not been kind to Tunisia's economy. The official inflation rate hit a five-year high of 6.5 percent in March, while the International Monetary Fund estimates Tunisia will post a big deficit in trade of goods and services of 7.3 percent of gross domestic product this year; it predicts GDP growth in 2013 of 4.0 percent, not enough to make much dent in poverty and unemployment.
The stock market was hit in February by the assassination of opposition politician Chokri Belaid, which ignited the worst street violence since the revolution. Elections expected towards the end of this year will involve fresh uncertainty.
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