HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 37
AFRICA DEAL VOLUME FALLS BUT VALUE HOLDS FIRM INQUIET FINAL QUARTER
M&A deal activity in Q4 2021 was particularly quiet in Africa, with deal volume down from both the previous quarter and the corresponding quarter in 2020. One contributory factor to this performance is that the continent generally goes on holiday during mid-December and only returns in January. Looking at 2021 M&A activity as a whole, overall deal volume increased by 18% to 110 deals compared to 2020. PE deal volume was up by 67% to 15 deals compared to 2020. This can be viewed as a positive sign that the cautious PE sector is now hungry for M&A deal-making again after being in hibernation for much of 2020. Overall deal value for 2021 was recorded at USD 11,684m, an 88% increase compared to 2020. This performance also represented the highest deal value recorded since 2016, on an unadjusted basis. In the last edition of Horizons, we felt it noteworthy to point out that Africa has a large private, unlisted sector. This
statement was not intended to be a justification for Africa’s low deal volume and value compared to more developed countries but was simply a statement of fact, as African M&A deal value has accounted for 1.7% of global M&A deal value since 2008 and only 1.2% since 2017. South Africa, in particular, has seen large-scale delisting activity in recent years. The number of entities listed on the Johannesburg Stock Exchange (JSE) has declined to its lowest level in memory and stood at 325 entities in November 2021 from the highs of c. 776 entities in the early 1990s, a decline of nearly 60% over the past 30 years or just over 14 entities per year on average. In this particular area, the bad news is that many more entities are looking to exit the highly regulated listed environment. There are mixed views about why this is happening, but one popular opinion is that entities which lack the scale and liquidity needed to attract the attention of the asset managers have taken a decision to delist as the drawbacks tend to outweigh the
BIG PICTURE
• Deal volume dropped to 19 deals, representing falls of 36% compared to Q3 2021 and 21% compared to Q4 2020 • Deal value was USD 3,438m, a 4% increase compared to Q3 2021 and a massive increase of 192% compared to Q4 2020 • PE deals fell by 25% compared to Q3 2021 with just three deals.
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
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2021
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Total Value (USD M)
PE Value (USD M)
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