HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 35
AFRICA “THE MARKET IS QUIET”, “WHERE ARE THE DEALS?”
Our hopes and aspirations were not met with much encouragement. Off the record discussions with certain South African based private equity players and also certain leverage finance providers has yielded the same feedback… “the market is quiet”, “where are the deals?” Again, I can only speculate (and hope) that Africa generally trails the more developed markets by up to a year. Therefore, with all the increased activity across the US and Europe, it must bode well for future activity in Africa, albeit, in 12 months, give or take. The fundamentals have not changed, we are seeing, inter alia: • The influx of foreign interest and investment into the African continent • The interest in multinationals to establish/acquire a platform in Africa from which to launch their African strategy • A consolidation strategy in certain sectors, such as logistics
• Divestment of non-core and poor performing assets; etc. We reported that some activity seemed to be emerging from the private equity sector, but it seems as though our reports were slightly premature. Deal volume for Q3 2021 was down 29% to 24 deals when compared to Q2 2021 and down 17% when compared to Q3 2020. Private equity deals were down 60% to two deals when compared to Q2 2021. Deal value for Q3 2021 was recorded at US$2,338m, a 21% decline when compared to Q2 2021 and reasonably flat when compared to Q3 2020. KEY SECTORS AND DEALS The Energy, Mining and Utilities (7) sector again leads the charge in the number of deals, followed by Industrials and Chemicals (5); Real Estate (3), Consumer (3) and financial services (2). In terms of geography, South Africa recorded (7) of the top 20 deals, with Egypt and Nigeria with (4) each. It is again interesting to note that 12 of the top 20 deals were acquired by foreign parties from, inter alia, USA, Canada, UK and China.
BIG PICTURE
• In our last edition, we noted that the African Continent remains a very small contributor to the Global M&A market with African M&A deal value accounting for 1.7% of Global M&A deal value since 2008 and only 1.2% since 2017 • Africa is a small contributor to the global M&A stats,but has a large private, unlisted sector. Twenty-four deals in a quarter is very small given the number of corporate advisers who service the African market with great skill. So, whilst the reported deals are few, we can only hope that the unlisted space is picking up.
PE/TRADE VOLUME &VALUE
70
6,000
60
5,000
50
4,000
40
3,000
30
2,000
20
1,000
10
0
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Trade Volume
PE Volume
Total Value (USD M)
PE Value (USD M)
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