Sub-Saharan Africa mergers reach $23.4 billion in first nine months of 2015

Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, has 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 $305.9 million during the first nine months of 2015, 4 percent more than the value recorded during the same period of last year.

Sneha Shah, Managing Director Africa at Thomson Reuters, said: “The value of announced M&A transactions with any Sub-Saharan African involvement reached $23.4 billion during the first nine months of 2015, 12 percent more than the value registered during the same period in 2014.”

“Sub-Saharan African equity and equity-related issuance totaled $2.0 billion during the third quarter of 2015, a 104 percent increase in value from the second quarter of the year. Despite the quarterly increase, Sub-Saharan African ECM declined 16 percent year-on-year to reach $5.4 billion during the first nine months of 2015,” she noted.

Shah spoke pointed out that Sub-Saharan African debt issuance reached $2.7 billion during the third quarter of 2015, 23 percent less than the value raised during the previous quarter and the lowest quarterly total since the first quarter of 2014.

In respect to investment banking, fees from completed M&A transactions totaled $116.6 million, a 49 percent increase from the comparative period last year, the highest first nine months period since 2011.

Fees from debt capital markets underwriting also increased 20 percent year-on-year to reach $39.9 million.

Syndicated lending fees fell 22 percent compared to a year ago to $60.7 million. Equity capital markets underwriting fees declined 16 percent to $88.8 million, and accounted for 29 percent of the overall Sub-Saharan African investment banking fee pool.

Rand Merchant Bank earned the most investment banking fees in Sub-Saharan Africa during the first nine months of 2015, a total of $38.7 million for a 12.6 percent share of the total fee pool.

Rand Merchant Bank topped the completed M&A fee rankings during the first nine months of 2015 and also took the lead for ECM underwriting fees. Citi and Zenith Bank earned first places for DCM underwriting and syndicated loans fees, respectively.
As for mergers and acquisitions, outbound activity slowed down 34 percent compared to the first nine months of 2014 to reach US$3.8 billion.

South Africa’s overseas acquisitions accounted for 64 percent of Sub-Saharan African outbound M&A activity, while acquisitions from Mauritius and Seychelles companies accounted for 27 percent and 6 percent, respectively.

Inbound M&A also saw a decline, down 6 percent to $5.6 billion. Domestic and inter- Sub-Saharan African M&A reached $8.3 billion, up 39 percent year-on-year, the highest first nine months total since 2010.

The Financials industry was the most active sector, accounting for 18.5 percent of Sub-Saharan African involvement M&A.

The largest deal with Sub-Saharan African involvement during the first nine months of 2015 was the $1.8 billion offer from Sonangol EP to acquire a 40 percent ownership interest in Kwanza Basin Blocks 21/09 20/11, producer of crude petroleum and natural gas, from Cobalt International Energy Inc.

Rand Merchant Bank topped the First Nine Months 2015 announced any Sub-Saharan African involvement M&A league table with $4.3 billion.

Speaking about equity capital markets, Shah noted that five initial public offerings raised $173.8 million and accounted for 3 percent of first nine months activity in the region, while follow-on offerings and convertibles accounted for 74 percent and 23 percent, respectively.

Steinhoff Finance Holding GmbH raised $1.2 billion from a convertible bond offering in July, the largest equity offering in the region so far this year. Java Capital (Proprietary) Ltd took first place in the first nine months 2015 Sub-Saharan African ECM ranking with a 15 percent market share.

In terms of debt capital markets performance, the total bond issuance in the region during the first nine months of 2015 reached $10.3 billion, down 31 percent over a year ago.

South Africa was the most active nation accounting for almost half (49%) of activity, followed by the Ivory Coast with 25 percent. Deutsche Bank took the top spot in the Sub-Saharan African bond ranking during the first nine months of 2015 with an 18 percent share of the market.