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Mergers, acquisitions grow in SSA

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Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, today released the quarterly investment banking analysis for the sub-Saharan Africa region.

According to estimates from Thomson Reuters / Freeman Consulting, sub-Saharan African investment banking fees reached US$154,7-million during the half of 2015, 10% more than the value recorded during the first six months of last year.

sub-Saharan African equity and equity-related issuance totalled US$1-billion during the second quarter of 2015, 60% less than the value recorded during the first quarter of the year. sub-Saharan African debt issuance reached US$3,2-billion during the second quarter of 2015, 23% less than the value raised during the previous quarter and the lowest quarterly total since the first quarter of 2014.

Sneha Shah, MD, Africa, Thomson Reuters, says: “The value of announced M&A transactions with any sub-Saharan African involvement reached US$15,3-billion during the first half of 2015, 12% more than the value registered during the same period in 2014. Outbound activity reached a four-year high, up 13% from the first six months of 2014 to reach US$3,3-billion. South Africa’s overseas acquisitions accounted for 65% of sub-Saharan African outbound M&A activity, while acquisitions by Mauritian and Nigerian companies accounted for 13% and 11%, respectively. ”

“Domestic and inter- sub-Saharan African M&A fell 11% year-on-year to US$3,8-billion, the lowest first half total since 2007. Inbound M&A also saw a decline, down 7% to US$4-billion. Energy & power was the most active sector, accounting for 18% of sub-Saharan African involvement M&A,” she added.

The largest deal with sub-Saharan African involvement during the first half of 2015 was the US$1,2-billion offer from Brait Mauritius for a 90% interest in British retailer New Look. Rand Merchant Bank topped the 1H 2015 announced any sub-Saharan African involvement M&A league table with US$4,4-billion.

In respect to investment banking, fees from debt capital markets underwriting more than doubled year-on-year to reach US$30-million, the best first half in the region since 2011. Syndicated lending fees also saw growth, up 63% to US$35,9-million. Equity capital markets underwriting fees declined 13% to US$56,9-million, accounting for 37% of the overall sub-Saharan African investment banking fee pool, while fees from completed M&A transactions totalled US$32-million, marking a 19% decline from the first half of 2014.

Rand Merchant Bank earned the most investment banking fees in sub-Saharan Africa during the first half of 2015, a total of US$20,5-million for a 13% share of the total fee pool. Investec topped the completed M&A fee rankings during the first half of 2015. Rand Merchant Bank was first for ECM underwriting fees, while Citi and JP Morgan earned first places for DCM underwriting and syndicated loans fees, respectively.

Despite the quarterly decline, sub-Saharan African equity capital markets increased 18% year-on-year to reach US$3,5-billion during the first half of 2015, marking the best first half by proceeds raised since 2010. Four initial public offerings raised US$172,8-million and accounted for 5% of first half activity in the region, while follow-on offerings accounted for the remaining 95%. GlaxoSmithKline raised US$841-million from a partial sale of Aspen Pharmacare Holdings shares in March, the largest equity offering in the region so far this year. Rand Merchant Bank took first place in the 1H 2015 sub-Saharan African ECM ranking with a 22% market share.

In respect to debt capital markets in sub-Saharan Africa, the first half bond issuance in the region decreased 3% from last year to US$7,3-billion during the first six months of 2015. South Africa was the most active nation accounting for almost half (49%) of activity, followed by the Ivory Coast with 34%. Deutsche Bank took the top spot in the sub-Saharan African bond ranking during the first half of 2015 with a 17% share of the market.