SSA Mergers and Acquisition down 74% in first 9-months of the year

The value of Mergers and Acquisition transactions in Sub-Saharan Africa in the first 9-months of the year dropped by 74 per cent to $16 billion, as reported by Refinitiv. Lucille Jones, Analyst, Deals and Intelligence at Refinitiv, highlighted the impact of the COVID-19 pandemic and resulting lockdown regulations on the economy, leading to a significant decline in M&A activity earlier this year. She noted that the pandemic caused a pause in deal-making as companies adopted a 'wait and see' approach due to uncertainty. However, there has been a gradual recovery in the M&A market over the summer months, with around 60 deals announced each month in the third quarter. While the number of deals is slightly below the five-year average, the momentum is positive. Jones mentioned that the second quarter slowdown contributed to the decline in M&A activity, but industries such as pharmaceuticals, tech, and FinTech have shown resilience and attracted investments. Large deals like the pharmaceutical deal announced in September, where a US firm acquired a thrombosis business from a South African drug maker, have boosted the sector. Tech companies, particularly in programming, fiber optics, and FinTech, have also received significant investments. Private equity investments in internet providers and payments firms indicate a growing interest in the region's tech sector. Despite the overall decline in M&A value compared to last year, outbound M&A activity has seen an 80% increase, driven by major deals in the oil and steel industries. Countries like South Africa, Uganda, and Senegal are emerging as key players in attracting M&A activity. These nations offer significant growth opportunities in sectors like tech, FinTech, and telecoms, making them attractive to foreign investors. Jones highlighted that while the first nine months of the year recorded the lowest M&A total in five years, the second half has seen a strong resurgence in investment. With $3.5 billion worth of deals in the second half compared to $1.7 billion in the first half, the region is showing signs of recovery in its M&A landscape. Despite the challenges posed by the pandemic, Sub-Saharan Africa remains a promising destination for M&A activity, with growing interest from international investors in key sectors.