DealMakers AFRICA Q2 2023
FROM THE EDITOR'S DESK
It is easy to be overly pessimistic at first glance. The analysis of H1 2023 dealmaking activity on the continent (excluding South Africa) on page 3 shows local deals valued at US$5,13 billion – down almost 60% on the value reported for the same period in 2022. It is important, however, to take a step back and to look at the historical data to gain a clearer picture. Comparing the same period for the four years from 2019 to 2022, the aggregate deal values were $15,3 billion, $3,4 billion, $7 billion and $11,9 billion respectively. While the numbers do not make for great reading, they reflect investment curtailed by global uncertainty arising from the COVID-19 pandemic, the war in Ukraine, rapidly rising interest rates and currency volatility. 2023 could be considered a regressive year – part of the much talked about reset. What the numbers do indicate is scrutiny by investors of their investment domiciling decisions, although still actively seeking targets with strong fundamentals.
To this point, the articles in this issue make for interesting reading, and Africa’s potential as an investment destination must not be underestimated (pg 14).
It is of no surprise that of the top 10 deals announced in H1 2023 (page 6), seven involve the energy and resources sector with an aggregate deal value of US$3,42 billion – 66% of the total value recorded for Africa in H1.
According to the recently released 2023 Deloitte Africa Private Equity Confidence Survey, private equity (PE) will continue to drive M&A activity on the continent. Despite the challenges already mentioned, the private equity industry remains resilient, with investment expectations still positive despite a high level of economic uncertainty and difficult trading conditions for portfolio companies. This narrative supports the private equity numbers released by DealMakers AFRICA (pg 4), which show that private equity is an ever-increasing factor in the total value of deals undertaken on the continent.
Regionally, the survey suggests that the PE fundraising environment in Southern, Northern and West Africa is largely expected to remain unchanged over the next 12 months, with some fund managers focusing on dealmaking and exiting existing portfolio companies instead of raising capital in the current uncertain climate. Across all regions, average deal sizes are expected to remain below $50 million over the next 12 months. Also according to the survey, Europe and the US continue to be the most important sources of capital for private equity in Africa, with investment strategies focused on strategic opportunities in Agriculture/Agribusiness, Financial Services, Food and Beverages, Healthcare and Pharmaceuticals, and Green Energy.
Included in this issue of DealMakers AFRICA is the second release of the Women of Africa’s M&A and Financial Markets Industry feature. The women profiled in these pages – from Ghana, Kenya, Mauritius and Uganda – share their inspiring stories of hard work, resolve and determination.
The DealMakers AFRICA Awards will be held in Lagos, Nigeria in March next year, at which we will present the Individual DealMaker of the Year Award (West Africa) for the first time. Look out for the request to send in your firm’s nominations.