Intra-Africa mergers and acquisitions (M&A) are gaining ground, with South Africa being the biggest investor into sub-Saharan Africa after China. A number of South African corporates have moved towards other African regions and made substantial investments. South Africa’s [DATA ASA:Absa Bank.] and Barclays Africa merger is one example of this.
Regardless of a volatile rand and labour market tensions, South Africa is showing substantial activity in the mergers and acquisition industry.
“South Africa, in the second quarter of this year, our mergers and acquisitions activity was down from the first quarter but it seemed to track the second quarter of last year so I think our local activity is looking on par with last year,” Edward Nathan Sonnenberg’s joint head of the corporate commercial department, Doron Joffe, told CNBC Africa on Thursday.
“As for sub-Saharan Africa, there has been an increase of about 63 per cent of activity but that was mainly due to two large transactions that happened in the energy sector in Mozambique. One or two last transactions when the market’s quiet can distort the numbers.”
South Africa’s Massmart, a unit of America’s retail corporation Wal-Mart, also announced a 51 per cent stake in Kenya’s supermarket chain Naivas on Wednesday.
“The infrastructure sector would certainly be one where everyone knows that Africa is in desperate need of infrastructure, and there’s going to be strong activity in that area. To make them attractive, South African companies should develop an African strategy to say that we’re part of the larger play, we’re not just a unique South African investment in us,” said Joffe.
He added that sectors of future interest will include resources, oil and gas, consumer sectors and the financial services, telecommunications and retail sectors.
“When you look at South Africa as a destination, you’ve got to compare it to where else people can invest in and I think South Africa, as part of Africa, is one of the better places in the world to be investing your money,” Joffe explained.
“Africa as a whole has got a growth rate of about 5 per cent, compared to other countries. South Africa’s got a stable legal system, a familiar regulatory environment, a familiar tax environment so I think there’s a lot to offer foreign investors when they enter South Africa.”