Overview of Mergers and Acquisitions Activity in Kenya
Kenya has experienced a substantial increase in Mergers and Acquisitions (“M&A”) activity in recent years. The Deal Drivers Africa Report, published by Mergermarket, ranks Kenya among Africa’s most sought-after country for M&A transactions. Additionally, until the onslaught of the COVID-19 pandemic, M&A activity in the East Africa region had increased significantly in recent times, with Kenyan deals dominating the market. The East African regional economy (in which Kenya has the largest economy) continues to be a key driver for sub-Saharan Africa’s growth.
Like in many emerging markets, private equity-driven transactions are one of the main drivers of M&A activity in Kenya. In recent years, the country has seen an increase in interest from private equity and venture capital firms looking to invest in banking and financial services, TMT, energy, fast-moving consumer goods and real estate, among other sectors.
The most M&A activity in Kenya in recent years has been in the financial services sector. As Kenya remains a hub for technological innovation, with pioneering mobile money platforms and high mobile-phone penetration, increased activity in the telecoms and Fintech space is expected.
With global crude oil prices stabilising, oil discoveries in Kenya will hopefully attract more foreign interest in the country for exploration activities in oil and gas, both offshore and onshore. Depending of the commercial viability of the oil finds, there may be potential for multiple deals in the oil and gas sector.
Kenya’s established business environment, robust legal and financial framework, and pillared development agenda provides an attractive investment platform for foreign investors with regional aspirations, and Kenya remains the gateway to establishing and growing an East African presence. In addition, Kenyan companies in financial distress now have more options than ever before. New possibilities for the rescue of ailing companies have opened up as a result of the development of local insolvency laws under the Insolvency Act, 2015. These include administration procedures and other schemes of arrangement. An administrator is appointed to maintain the company as a going concern and achieve a better result for the creditors than liquidation would achieve. During pendency of administration, there is a moratorium on insolvency and legal proceedings against the company. The Insolvency Act, 2015 has also made extensive provisions on voluntary arrangements under which the company can enter into voluntary arrangements with its creditors. This may take any number of options including company restructuring, compromises and […]
