DealMakers AFRICA Q3 2021
From the editor's desk
Some eighteen months on, Africa remains in the grip of the pandemic. The outlook for the continent remains uncertain – with its recovery dependent on the path of the global pandemic, the regional vaccination efforts, and the emergence of virulent strains. This, in addition to the traditional disruptions in global activity and financial markets. Yet, in spite of the outlook, Africa remains a place of interest for investors, particularly for private equity funds.
Analysis by DealMakers AFRICA (pg 3) shows that the total value of deals (excluding South Africa) recorded in the period Q1-Q3 2021 was US$11,66 billion, up 55% on that recorded over the same period in 2020, with a 26% increase in the number of transactions announced. West Africa continues to dominate, recording 34% of M&A deals announced with Nigeria (87 deals), followed by Ghana (25 deals) being the most active. Egypt has, over the past 18 months, stolen a march on Kenya, taking the spot as the second hottest investment destination with 108 deals announced in the year to end-September valued at US$3,42 billion.
The largest ten deals by value (excluding South Africa and foreign deals) were predominantly in Nigeria, and in the oil and gas sector (pg 4).
Private equity continues to be a driving force, representing 54% of the deals announced on the continent. The focus on providing facilities to the unbanked across the continent speaks to this. Drilling down further, of the 56 private equity transactions recorded in Nigeria, 20 of these were in the financial services sector (pg 6). The largest was the US$400 million investment in OPay, a Nigerian mobile payments platform, valuing the company at U$2 billion. In Egypt (10 deals) and Kenya (8 deals), the financial services sector also took the largest share of the private equity pie.
As more investors look to private equity as a means of investing in the continent, particularly now that there is greater emphasis on the environment, social and governance aspects of transactions, the availability of warranty and indemnity insurance may unlock more deals by reducing the deal execution risk by transferring the risk from the buyer/seller to an insurer (pg 12).
The DealMakers AFRICA Annual Gala Awards to celebrate the work by advisory firms in East and West Africa, usually held in March each year, has, once again, had to be cancelled. While economies are slowly opening up, the return to such events is still some way off. The awards will, however, still be acknowledged on our social media sites and in the DealMakers AFRICA Annual publication.
DealMakers has this month published a feature on ESG in dealmaking and financial markets.
With ESG factors becoming increasingly important in the assessment and valuation of potential merger and acquisition opportunities, ignoring ESG is no longer an option for companies, and is now considered a risk factor alongside reputational risk. Articles carried in this feature give insightful information on this topical issue.
The survey can be downloaded from