“Merger and acquisition (M&A) activity is up compared to 2012, and we’ve seen that in contrast to a slow down in growth in other parts of the world. Africa’s high growth rates and the growing middle class have driven investors to seek opportunities in its vast growing markets,” Mergermarket M&A reporter Vinjeru Mkandawire told CNBC Africa.
“[This is] particularly [with] Asian investors who’ve really boosted deals across a number of sectors, especially in the extractive industries, where we’ve seen that the Asian players are often willing to pay higher premiums, and this really boosted the values in the past year.”
While fourth quarter M&A activity was down 13.9 per cent from the third quarter, investors continue to realise the opportunity to capitalise on Africa’s growth and a growing middle class.
Sub-Saharan merger and acquisition totalled roughly 27.7 billion US dollars in the whole of 2013. South Africa dominated the deal count with 124 deals valued at 8.5 billion dollars.
Mozambique was a prominent M&A feature last year emerging as a rising player due to its natural gas resources. The Southern African country has since attracted large investor interest from China and India.
“The Mozambican deal between the China National Petroleum Corp and Eni SPA was the largest in sub-Saharan Africa. The high exposure of African markets to the Asian markets, particularly China, will keep investors waiting to assess whether the slowdown in the Chinese economic growth might negatively impact inbound deal-making in the region,” said Mkandawire.
Non-conventional sectors also seeing growing interest in investment include the consumer-driven sectors such as retail, healthcare and financial services.
Last year, the highest value-transaction in the entire continent was in the telecommunications, media and technology (TMT) sector, with the United Arab Emirates’ Etisalat acquisition of a stake in Morocco’s Maroc Telecom.
South Africa’s mobile network operator Vodacom also announced intention to buy fixed-line telecom company Neotel, which Mkandawire believes could spur further activity in the TMT sector.
“In the pharmaceutical sector, we saw Ciplo acquire Cipla Medpro in South Africa last year in what was quite a high-profile transaction, and one of India’s largest ever investments into the country. We are expecting to see a lot of activity coming from the consumer-driven sector,” said Mkandawire.