Ghana to push ahead with Agyapa Royalties IPO in London

Ghana wants to complete the stock market flotation of its gold royalty company after elections in December, according to Finance minister Ken Ofori-Atta who said the West African country could not continue to “borrow, borrow, borrow”.

Africa’s biggest gold producer is seeking to raise $500m from the sale of up to 49 per cent of Agyapa Royalties on the London and Ghana stock exchanges. The money raised will be invested by the government of President Nana Akufo-Addo in education, health, housing and infrastructure. But the listing is on hold until Ghana’s special prosecutor has completed a review to check if any elements of the deal, which will create the first Africa-focused minerals royalty company, were corrupt.

“The expectation was to have done this [flotation] before the year and we will stick with that,” Mr Ofori-Atta said in a joint interview with Kofi Osafo-Maafo, the chief executive of Agyapa.

Ghana, which saw receipts from the export of gold hit $6.2bn last year, has been struggling to deal with the economic impact of the pandemic. Its economy contracted for the first time in almost four decades in the second quarter and the government’s gross debt is expected to reach 70 per cent this year, according to the IMF. Mr Ofori-Atta said Agyapa was a way for Ghana to raise non-debt capital free from repayment obligations or interest payments.

“I don’t think as a country as a continent we can continue to borrow, borrow, borrow,” he said. “It is unsustainable.”

Mining companies in Ghana must pay royalties of 5 per cent of gross revenue from operations. Agyapa, which is incorporated in the tax haven of Jersey, has the right to receive almost 76 per cent of the royalties generated by 12 big mines and four development projects.

The income it receives from the mines, which last for the life of the current mining leases, will be used to pay a dividend but also to buy royalty streams from other mines in Ghana and across Africa. If the deal goes ahead it will be the biggest natural resources share sale in London since Russian aluminium-to-hydropower group En+ raised $1.5bn in 2017. Gold accounts for nearly half of Ghana’s export revenues and like cocoa, its other major export, it is politically sensitive.

Sceptics argue that the royalties deal lacks transparency and was rushed through parliament but the government has said such criticism from the opposition is motivated by looming presidential elections in December. Bright Simons, a researcher with the Imani think-tank and spokesman for a coalition of civil society groups opposed to the deal, said their analysis found the government had “grossly undervalued the gold revenues by at least 60 per cent”.

“The government’s refusal to share the underwriting agreement it has with the various investment banks and transaction advisers with parliament, and the decision to shield the investment vehicle behind Jersey’s trust secrecy laws, seriously interferes with the ability of civil society to hold the deal to basic transparency and integrity standards,” he said.

Opponents have also pointed out that Mr Osafo-Maafo is the son of senior cabinet minister and a school friend of the deputy finance minister.

Mr Ofori-Atta hit back at those claims.

“The planning has been quite meticulous”, referring to the 2018 Act that created the Minerals Income Investment Fund, the vehicle that receives the government’s mineral royalties and will be the biggest shareholder in Agyapa.

He also said there were “70 or 80 companies listed on the LSE” that are incorporated in Jersey. “We don’t find anything really wrong with that. It is tax-favourable.”

Mr Osafa-Maafo defended his appointment, which was overseen by headhunter Korn Ferry, saying it was disappointing that critics had ignored his long career in the investment industry to focus “on the school I went to and my lineage”.

“I think that after spending close to 22 years in the City of London, if something is going to be listed London . . . I think under measure I would qualify,” said Mr Osafo-Maafo.

His previous roles include senior investment manager at Pictet Asset Management covering oil & gas and mining. This story has been updated since publication.

Agyapa will receive the royalties generated by 16 assets – 12 in production and four in development.


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