Kenya’s Growth Rate Attracts International Mergers

Kenya is now ranked Africa’s fourth most attractive country for Mergers and Acquisitions (M&A) demonstrating the country’s attractiveness.  The attractiveness is largely driven by the country’s growth rate as evidenced in companies’ earnings in a number of industries

According to Edward Burbidge, CEO of Burbidge Capital, “A stable political environment is the most important thing for international acquisitions. Credit should be given to the Kenyan political system due to the great level of stability and the government that seems producing policies that are attractive enough for international companies.”

Burbidge also added, “There are also some reviews going on currently in the mining and energy sectors, it is obviously extremely important that this progressive nature of policy making continues to create that attraction and the prevailing environment.”  A number of deals were struck last year across East Africa in sectors such as financial services, natural resources, oil and gas and agriculture ranging from five to 20 million US dollars.

According to Deal Drivers Africa, a UK based firm, over the last decade Africa has been a vibrant region for M&A activity, which has held up well even at a time of global economic uncertainty.  High growth rates and corresponding rates of return have been instrumental in attracting international businesses. Also of importance is Africa’s projected six per cent growth for 2014 at a time when developed economies are estimated to grow at 1.2 percent.

Deal Drivers Africa, published by Mergermarket in collaboration with ENSafrica and Nedbank Capital, derives its findings from interviews with 100 M&A practitioners operating in Africa, including corporate executives, private equity investors, legal advisers and investment bankers.

The Deal Drivers Africa says, since 2006, 276 US dollars billion worth of mergers and acquisitions transactions have taken place in Africa, over a total of 1,647 deals.  “Following a peak in 2007, M&A activity has remained relatively steady, with 188 deals taking place in 2012 at a combined value of 33 US dollars billion, slightly up on the total value for 2011,” noted the report.

Source: CNBC Africa