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M&A value soars in SA and Nigeria
According to Baker Mckenzie, the value of mergers and acquisitions in South Africa and Nigeria soared in the first half of the year, with Kenya being a laggard. South Africa is leading in high value deals in the technology sector. However, the recent unrest in the country threatens to impact the positive moves made in foreign investment. Wildu du Plessis, Head of Africa for Baker McKenzie joins CNBC Africa for more.
Tue, 20 Jul 2021 14:11:06 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- M&A activity in South Africa and Nigeria has seen a surge in value in the first half of the year, driven by high-value deals in the technology sector.
- Virtual due diligence enabled deal-making to continue amidst the pandemic, highlighting growing interest in technology and fintech sectors.
- Investors are optimistic about South Africa's potential as an investment destination, but restoring stability is crucial to sustain investor confidence and prevent capital flight.
Mergers and acquisitions (M&A) activity in South Africa and Nigeria has seen a significant increase in value in the first half of the year, according to a report by Baker McKenzie. The report highlights a surge in high-value deals, particularly in the technology sector, in South Africa. However, recent unrest in South Africa poses a threat to the positive momentum in foreign investments. Wildu du Plessis, Head of Africa for Baker McKenzie, shared insights on the recent trends in M&A activity in the region. The report indicates that while the number of deals may have slightly dropped, the value of these deals has shown a remarkable increase.
The COVID-19 pandemic had initially hindered deal-making activities, with private equity firms reluctant to commit capital without being able to conduct on-ground due diligence. However, the shift to virtual due diligence allowed deal-making to continue, albeit with some challenges. The underlying trend in South Africa's M&A activity points towards a growing interest in technology and fintech sectors, driven by the increasing reliance on technology solutions by African consumers. The pandemic has further highlighted opportunities in sectors like agriculture, prompting investors to explore new avenues for investment.
Despite the recent riots and political turmoil in South Africa, investors are showing confidence in the country's potential as an investment destination. The positive reception towards South Africa's business environment suggests that investors view the country as open for business. While there may be opportunistic buying due to the aftermath of the pandemic and the availability of assets at lower valuations, the stability and growth prospects of economies like South Africa, Nigeria, and Kenya continue to attract investment.
Wildu du Plessis emphasized the importance of restoring stability in South Africa to prevent capital flight and ensure investor confidence. The recent market reactions following the turmoil in the country highlight the significance of maintaining a stable environment for investment. As investors closely monitor the situation in South Africa, the potential for a shift in investment to alternative markets like Nigeria and Kenya remains a possibility if stability is not sustained.
In conclusion, the surge in M&A activity in South Africa and Nigeria despite challenges like the pandemic and recent unrest demonstrates the resilience of these economies and the attractiveness of investment opportunities in the region. As investors navigate the changing landscape, maintaining stability and fostering growth will be crucial in sustaining the momentum in M&A transactions.
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