African Merger Acquisitions (M&A) activity across the continent has continued to trend upward both in value and number of transactions.
The Maghreb region has seen a decline in activity as a percentage of the continent over the past few years, as political unrest and slow growth relative to the rest of the continent characterise these markets.
A very clear growth in activity is evident in Nigeria from 2009 to 2013, while in 2014 activity slowed marginally relative to the continent. This could be attributed to the uptick in Boko Haram-related violence over the year and more recently to the gloomy outlook in the Oil and Gas industry in the country, one of its largest drivers of growth over the past few years, as well as investors exiting due to continued theft, spills and insecurity in the industry.
Egypt and Sudan understandably saw a major decline in activity over the 2011-2013 period compared to 2010, as Egypt underwent sustained political unrest and South Sudan seceded from Sudan, causing much uncertainty in the region. There was a notable uptick in activity in 2014, as Egypt’s economy began to recover from the period of turmoil.
Southern Africa (ex-SA) and East Africa make up the largest portion of M&A activity on the continent (ex-SA). These regions remain a persistent place of interest for investors and inter-regional activity. South Africa has constituted between 53% and 63% of all activity over the period under review.
Activity in the Consumer discretionary industry has steadily increased from 2011 to 2014, with transactions in the tourism, vehicles and textiles industries standing out in 2014.
Financials and Industrials remain strong industries for investment, in line with the trends of the PE transaction activity.
The decline in the telecoms industry activity is not necessarily an indicator of a slowdown, as this industry has been lumpy in the past (see 2011). This is due to the large size of individual projects and infrastructure build that occur sporadically.