Angola´s capital market starts to gain shape

In it´s ongoing effort to boost investment and diversify its economy away from oil, Angola has seen a flurry of activity in February concerning the creation of a capital market and the stock exchange, a long-time goal that could become a reality with the privatization of some of the country´s biggest companies.

One of the key pieces of new legislation that creates condition for the Committee on Capital Markets to launch is the Legal Framework for Regulated Markets and Securities Financial Services, according to legal information service Legis-PALOP+TL.

Approved by a now published presidential decree (1/19), the new legislation mandates market entities (Regulated Markets Management Companies, clearing houses, centralized systems and securities settlement) to increase their share capital up to the limit of 900 million Kwanzas (about 2.5 million Euros).

The Committee on Capital Markets (CMC) has for long existed formally and is staffed, but the financial market has ben limited to the transaction of Treasury bonds and bills.

The program of full and partial privatization of 74 public companies, to be approved by the Angolan Executive via the Angola Securities Debt Exchange (BODIVA), could boost the emergence of corporate stock market.

Another key piece of legislation is regulation 2/19, the Legal Regime of the Undertakings for Collective Investment in Venture Capital, also now published.

This new legislation set out the authorization procedures for incorporation and prior registration in the CMC for the start of activities by Venture Capital Investment Companies (SCR), Venture Capital Investment Funds (FCR) and Risk Capital Investors (ICR), whose activity is an alternative means of corporate financing.

These entities, are mandated by the new legislation to have a minimum capital of 40 million Kwanzas (about 100 thousand Euros).

Also now published, and already effective, was regulation 3/19, the Legal Regime of Collective Investment Undertakings for Asset Securitization.

This new legislation details the process of authorization for incorporation and prior registration for the start-up of the Securitization Investment Companies (SIT) and Securitization Funds (FIT), which must be made with the CMC.

Acording to Legis-PALOP+TL, the regulation establishes that transaction asset securitization is an alternative source of investment for securities underwriters and a way of making their business more flexible and reducing credit risk and borrowing costs by ceding entities, that are also required to have a minimum share capital of 40 million Kwanzas (about 100 thousand Euros).

Rules applicable to Asset Management Companies (GSP) were also now published and are effective, applying to non-bank financial institutions linked to the capital market and the investment that are subject to Regulation 1/15, for the purposes of authorization for constitution and registration to start business with CMC, relating to Brokerage Agents and Securities Investment Services.

The entities are mandated to use the new Information Model form to provide CMC with the value of the managed portfolios.

With an active market for stock and other financial instruments for companies, the Angolan government expects to boost corporate investment, and also to revive financially strained public companies.

The plan was already foreseen before the recent assistance agreement with the International Monetary Fund (IMF), which sets out a liberal agenda for the country, by increasing the role of the private sector.

The program, which is to be organized with the Capital Markets Commission and the State Assets and Assets Management Institute (IGAPE), should be implemented over three years, by 2021, but in phases.

According to a set of documents published in December on the IMF’s website, regarding the financial assistance requested by the Angolan Government, the Angolan National Development Plan provides for the liquidation of state-owned enterprises that are not viable until 2019 and the privatization of at least 20 non-strategic state enterprises and the sale of shareholding by 2022.

in January 2018, the President created a commission to prepare and implement the privatization process, via the Stock Exchange, of public companies of reference, which is coordinated by the Minister of State for Economic and Social Development, Manuel Nunes Jr., and includes officials from the ministries of Finance, Economy and Planning and the secretaries of state for Economic, Finance and Treasury Affairs of the President of the Republic.

The commission is supported by a technical group coordinated by the Secretary of State for Finance and Treasury, Vera Daves, who is carrying out the survey and diagnosis of eligible companies with potential for stock market privatization.

Sonangol already has the list of subsidiaries that will go through the same process.

State-owned companies to be privatized are active in the telecommunications sector, oil, mining, agriculture, banking and insurance.
Among those whose capital is expected to be partially floated in the stock market is the national air carrier, TAAG.(end)

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