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DealMakers AFRICA Q3 2019

From the editor's desk

The progress this year, chartered by The African Continental Free Trade Area (AfCFTA) particularly the launching of the operational phase in July, gives birth to the idea that it is the ‘new dawn’ for Africa. Its aim is to bring together 55 countries, six of which are among the world’s fastest growing economies, to create a single market with a combined GDP of c.$3,2 trillion covering a market of c.1,27 billion people. The UN Economic Commission for Africa believes AfCFTA could lead to an increase in intra-African trade by between 15% and 25%, up from the current 16% which is critical for growth and job creation.

While there is a great deal of political enthusiasm, tough negotiations lie ahead. Countries still need to agree on which products and services will be tariff-free, and to agree on matters such as investment, competition, and intellectual property rights. January 2020 is set as the deadline to agree on which products will be tariff-free. In addition, apart from regional conflict and instability, more obvious obstacles such as poor infrastructure, corruption and inefficiency in government processes stand in the way, not helped by the fact that there are widely varying stages of development between countries. It is, however, a start.


Analysis of Q1-Q3 merger and acquisition data collected by DealMakers AFRICA (excluding South Africa) shows the total value of deals at $88,92bn for the period, up marginally on H1 numbers (just $1,5bn). If foreign deals are excluded (foreign deals are recorded when a company being acquired is based in a non-African country but has subsidiaries or assets in one or more African countries), the value drops to $16,58bn from 312 deals.

By region, the most active was East Africa with 103 deals, of which 70 were recorded in Kenya with a value of $886m. West Africa recorded 84 deals, with Nigeria (unsurprisingly) the most active with 50 deals. By value, Southern Africa led the tables at $5,1bn off 76 deals –Mozambique leading the region with $3,9bn off just six deals, attributed almost entirely to the acquisition by Total of the Anadarko assets (26.5% stake in Mozambique LNG) from Occidental.Another transaction worth noting, if not for its size in value, then for its impact on the inclusivity ofthe people of Mozambique, is the IPO and listing of Hidroeléctrica de Cahora Bassa on theBVM, the country’s stock exchange (page 5).

 

Private equity deals, which are included in the regional numbers and whose values are, for the most part, undisclosed, were most prominent in Kenya, with 28 investments during the period –mainly in the medical space, followed by energy and fintech. Of Nigeria’s 50 deals, half were private equity and of these, almost a third involved fintech/IoT deals. 

 

DealMakers AFRICA will host the 2019 Annual Awards in Nairobi on March 3rd 2020, at which the work by advisory firms in East and West Africa will be celebrated. Once again, I am grateful to our event sponsors, Ansarada and Brunswick who, like us, champion the milestones achieved for the continent by this industry.

Marylou Greig