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Mergers & Acquisitions Across Sub Saharan Africa Hit Sh1.7trn in 9 Months

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The value of announced Mergers& Acquisitions (M&A) transactions with any Sub-Saharan African involvement reached US$16.0 (Ksh1.7 trillion) billion in the first nine months of 2020. The Refinitiv report covering the first nine months of 2020 has revealed.

According to the report released on Thursday, the Ksh1.7 trillion value is 74% less than the value recorded during the same period last year when Naspers’ US$35.9 billion (Ksh2.9 trillion) internet assets spin-off boosted merger activity to an all-time high. 

The value of deals recorded so far this year is the lowest year-to-date total since 2004.  The number of deals declined 11% over the same period to a seven-year low.  

The value of deals with a Sub-Saharan African target declined 58% to a seventeen-year low of US$7.9 billion, as domestic M&A within the region declined 69% from last year and the combined value of inbound deals reached just US$5.2 billion, the lowest first nine-month level in five years. 

The largest deal involving a Sub-Saharan African target was announced at the start of September – US pharmaceuticals firm Mylan agreed to buy the thrombosis business from South African drugmaker Aspen Pharmacare for US$758.5 million.  

Deals in the energy and power sector accounted for 26% of Sub-Saharan African target M&A activity during the first nine months of 2020, followed by materials (23%) and financials (14%).  South Africa was the most targeted nation, followed by Uganda and Senegal.

Outbound M&A reached a four-year high of US$4.6 billion during the first nine months of 2020, 80% more than the value recorded during the same period in 2019, despite an 11% decline in the number of deals. 

The value was boosted by Angolan state-owned Sonangol’s purchase of PT Ventures from Africatel Holdings for US$1 billion and Templar Investments’ US$1 billion offer for Jindal Steel’s Oman unit.

With advisory work on eleven deals worth a combined U$1.7 billion, JP Morgan holds to the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during the first nine months of 2020. 

Investment Banking Fees

According to the report, investment banking fees in Sub-Saharan Africa reached an estimated US$40.9 million during the third quarter of 2020, less than half the value recorded during the second quarter of 2020 and the lowest quarterly total since Q1 2005. 

Around US$264.6 million worth of fees were earned in the region during the first nine months of 2020, down 38% from 2019 and a seven-year low with fee declines recorded across M&A advisory, debt capital markets underwriting, and syndicated lending.  

Advisory fees earned from completed M&A transactions generated US$51.4 million, down 71% year-on-year to the lowest first nine-month level since 2003. 

Debt capital markets underwriting fees declined 19% to US$46.6 million, marking the lowest first nine-month total for bond fees in the region since 2016, while syndicated lending fees fell 35% to a six-year low of US$105.2 million.

Equity capital markets underwriting fees totalled US$61.4 million, more than double the value recorded during the same period in 2019.  

Read>>>>> KCB Acquires Sh16.3bn Loan For SME Lending

Government & Agency fees accounted for 22% of total investment banking fees earned in the region so far during 2020, up from 12% during the same period last year.  South Africa generated the most fees in the region, a total of US$160.2 million accounting for 61%, followed by Nigeria with 12%.   

Standard Chartered earned the most investment banking fees in the region during the first nine months of 2020, a total of US$23.4 million, or an 8.8% share of the total fee pool.

Equity Capital Markets

Sub-Saharan African equity and equity-related issuance reached US$2.0 billion during the first nine months of 2020, 25% more than the value recorded during the same period last year, but lower than every other first nine-month total since 2013. 

The number of deals recorded declined by 10% to the lowest year-to-date tally since 2012.  One initial public offering has been recorded so far this year, compared to three at this time last year. 

Malawian telecoms company, Airtel Malawi, raised US$28.7 million on the Malawi Stock Exchange in February.

JP Morgan took first place in the Sub-Saharan African ECM underwriting league table during the first nine months of 2020. 

Debt Capital Markets

The African Development Bank raised $3 billion in a “Fight Covid-19” social bond at the end of March to help alleviate the economic and social impact the Coronavirus pandemic will have on livelihoods and economies in the region. 

With this deal, and Ghana’s US$3 billion Eurobond in February, Sub-Saharan African debt issuance totalled US$8.9 billion during the first quarter of 2020, the second-highest first quarter DCM total in the region of all-time. 

Only US$1.9 billion was raised during the second quarter, the lowest quarterly total in eight years, followed by US$4.0 billion during the third quarter. 

The total proceeds raised during the first nine months of 2020 is US$14.7 billion, down 26% from last year and a five-year low. BofA Securities took the top spot in the Sub-Saharan African bond underwriter ranking during the first nine months of 2020 with US$2.2 billion of related proceeds, or a 15% market share.

See Also>>>> Banks Slow Down Acquisitions and Mergers

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