Business
Africa mergers and acquisitions grew 18% to $25 billion in 2012 – Report
The value of mergers and acquisitions for sub-Saharan African targets rose by 18 percent to US$25 billion last year.
About half or US$12 billion worth of the deals targeted South African companies, said a Thomson Reuters Deals Intelligence report on Sub-Saharan Africa Investment Banking Analysis 2012 released Tuesday.
“The next most targeted nations were Nigeria and DR Congo. South Africa and The United Kingdom were the most acquisitive nations during 2012, accounting for 39 percent and 22 percent of Sub-Saharan Africa target mergers and acquisitions, respectively,” said Thomson Reuters managing director for Africa Keith Nichols.
The Materials, Energy and Power sectors were most active in the mergers and acquisitions deals. Sub-Saharan African investment banking fees declined by 27 percent to US$307.9 million during 2012 from 2011 when fees reached US$421 million.
Year-on-year fee declines were seen across all asset classes except for loans, where fees nearly doubled from 2011. Fees from syndicated lending totaled US$83.8 million during 2012, accounting for 27 percent of the overall Sub-Saharan African investment banking fee pool.
Despite the higher mergers and acquisitions activity, investment bankers did not earn much in terms of fees. Fees from mergers and acquisitions advisory saw the biggest year-on-year decline, falling 60 percent from US$221.1 million during 2011 to US$87.7 million in 2012.
Equity capital markets underwriting fees totaled US$71.3 million during 2012, down 15 percent from the previous year – US$84.1 million, while fees from debt capital markets declined 11 percent to total US$65.1 million for the year.
JP Morgan topped the Sub-Saharan Africa fee rankings for 2012, with a 10.5 percent cut of the fees while Citi and Bank of America Merrill Lynch followed in second and third positions respectively.
Mr Nichols noted that Equity Capital Markets issuance reached US$4.8 billion during 2012 to finish 15 percent down on 2011 when it was US$5.6 billion, marking the slowest year for sub-Saharan African equity capital markets activity since 2005.
Morgan Stanley topped the 2012 Sub-Saharan Africa equity capital markets ranking with 22 percent of the market.
Sub-Saharan debt issuance reached US$11.8 billion from 29 issues during 2012, a four percent decline from 2011.
Government and Agencies was the most active sector during 2012, accounting for 85 percent of the market.
Issuance from the Financials sector accounted for a third of the market.
The largest Sub-Saharan Africa bond issued during 2012 was a South African government bond worth US$1.5 billion.
Source: Africa Review