Mota-Engil SGPS SA, Portugal’s biggest builder, expects continued “huge demand” for projects in Africa as it prepares to sell shares in its African unit.
“The mining sector, the oil and gas sector and also agribusiness are demanding a lot of infrastructure,” Chief Executive Officer Goncalo Martins said today on Bloomberg Television’s “On the Move” with Anna Edwards in London. “Investors are looking at exposure to Africa.”
Mota-Engil is among Portuguese construction firms expanding in the country’s former colonies in Africa, notably Angola and Mozambique, where a boom in the oil, gas and mining sectors has sparked projects to rebuild infrastructure after decades of civil war. Africa accounted for almost 50 percent of the company’s revenue last year.
Mota-Engil Africa is scheduled to begin trading on the London Stock Exchange (LSE) July 16, the company said yesterday in an initial public offering prospectus. The choice of London was logical because “a lot of investors will want to be exposed to Africa here,” Martins said. “London is the main market in Europe so it’s very important for the company to be here.”
Mota-Engil and the Africa unit are offering 35 million shares for 920 pence to 1,160 pence each in the IPO, according to the prospectus. At the upper end of the range, that would translate into a market value of 1.33 billion pounds ($2.3 billion), based on 115 million shares outstanding.
The offering includes 15 million new shares for investors who were shareholders of the parent company before June 20 and up to 20 million shares for institutional investors sold by Mota-Engil. The company has tapped Standard Bank as sole global coordinator.
Martins declined to predict how much Mota-Engil Africa will be worth when it begins trading, saying he’ll wait for “the market to decide.”
Mota-Engil Africa will use the IPO proceeds to expand its core construction and engineering business in the sub-Saharan region, according to the prospectus. The company operates in 10 countries in Africa and its clients include Brazilian mining company Vale SA (VALE), Angolan state-owned oil company Sonangol and U.S. oil group Chevron Corp.
The company plans a payout ratio of 50 percent to 75 percent of earnings and parent Mota Engil will hold 65 percent to 69.6 percent of the shares after the IPO, according to the prospectus.
Mota-Engil Africa’s 2013 net income rose to 76.2 million euros ($65 million) from 47.8 million euros the previous year, according to the prospectus. Sales rose to 1 billion euros from 727.2 million euros.
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