Effects of Covid-19 scourge have seen a decrease in volume and value of mergers and acquisitions across Africa in the first half of this years, says a law firm.
However, the company says recent partnerships of African countries with global economies should be cause for optimism as it is likely to brighten the continent’s prospects for medium-term recovery
Baker McKenzie says clouds still hang over mergers and acquisitions in the short-term with economic uncertainty likely to cause reduced foreign investment.
It said Kenya has seen a 50 percent drop in volume and a 51 percent fall in value of M&A during the period compared to the same time last year.
There were 15 M&A deals in H1 2020 worth Sh12.9 billion ($129 million), 12 of which were cross-border transactions.
CROSS-BORDER DEALS
Baker McKenzie notes that for inbound cross-border deals, the focus was on media and entertainment with three deals, as well as financials, retail and materials sectors, which recorded two transactions each, while one was an outbound transaction which had the highest deal value of all cross-border deals.
Bujagali Energy’s Sh3.9 billion ($39 million) stake to Jubilee Holdings was the highest outbound cross-border transaction of the period, while commercial International Bank Egypt’s acquisition of Mayfair Bank for Sh3.5 billion ($35 million) was the top inbound cross border deal.
"Kenya has long been considered East Africa’s investment hub attracting some high-value M&A deals in the last few years. However, the country’s post-pandemic economy will take some time to recover. It could be that its telecommunications sector, which has a well-developed market for mobile money services, will boost investment opportunities in a post Covid-19 market," the report says.
In sub-Saharan Africa, M&A volume decreased 24 percent to 254 deals, compared to 338 deals for the same period last year. Total value of M&A deals was down 56 percent to Sh680 billion ($6.8 billion) in the first half of 2020, compared to Sh1.53 trillion ($15.3 billion) in the same period in 2019.
SH480 BILLIONThe firm notes that the majority of deals in the first half of the year were cross border, with 160 transactions totalling Sh480 billion ($4.8 billion).While Covid-19 has adversely affected most sectors of the economy, Baker McKenzie observes that some segments such the technology are likely to be better able to adapt and take advantage of current conditions.The law firm says that some of the developments that are likely to help the continent post-Covid-19 include the African Continental Free […]