Economy
Nigeria Records 28 Deals Worth $1bn in H1 2021
By Modupe Gbadeyanka
A new report from Baker McKenzie has indicated that in the first half of 2021, Nigeria and South Africa recorded a surge in mergers and acquisitions (M&A).
However, Kenya, another key economy in Sub-Saharan Africa, witnessed a slight decline in the period under consideration, according to an analysis of Refinitiv data.
It was revealed that 28 deals worth $1 billion were recorded in Nigeria in H1 2021, indicating that by transaction volume, it rose by 17 per cent and by value, it soared by 267 per cent.
Refinitiv data reveals that domestic transactions decreased by 15 per cent to 11 deals, but deal value increased by 342 per cent year-on-year to $726 million.
Also, cross-border transactions increased by 13 per cent to 17 deals, with deal value rising by 8 per cent to $296 million, with financial companies being the prime targets for inbound deals at four transactions, showing a 100 per cent increase y-o-y and deal value of $10 million, a 327 per cent increase year on year.
Once again, the US served as the primary investor for Nigerian companies, with four deals worth $13 million. The largest inbound deal into Nigeria in H1 2021 was Mwendo Holdings BV’s (South Africa) $182 million acquisition of Blue Lake Ventures Ltd (Media and Entertainment), announced in June 2021.
In a statement obtained by Business Post, the Head of Africa for Baker McKenzie, Mr Wildu du Plessis, stated that while investors from the US have shown interest in Africa for some time, under President Joe Biden, the general consensus is that US engagement with African countries is focusing on strengthening relationships in a strategic, co-operative way.
It has been noted that Mr Biden will continue with successful bipartisan programmes implemented by his predecessors, as well as further encouraging US trade and investment in the continent.
Considering that American companies were the top investors in two of Africa’s largest economies in the first half of 2021, dealmakers are clearly comfortable with Biden’s approach to Africa.
South Africa
The value of M&A transactions in South Africa in H1 2021 amounted to $52 billion, with 169 deals announced in the period. Compared to the first half of 2020, transactions volumes decreased by 8 per cent but deal value increased by 958 per cent in the first half of 2021.
Refinitiv data showed that the volume of domestic transactions increased slightly to 80 deals, a 10 per cent increase y-o-y. Domestic transactions in South Africa in H1 21 were worth $46.7 billion, a dramatic 2,148 per cent increase. Further, cross-border transactions increased 17 per cent to 89 deals, with deal value surging 251 per cent to $5.4 billion.
According to Marc Yudaken, Partner in the Corporate/M&A Practice at Baker McKenzie in Johannesburg, “Despite the excellent start to 2021, the unrest in South Africa threatens to impact the positive strides made in terms of foreign investment into the country in the first six months of this year.
“For the sake of South Africa’s post-pandemic recovery, the turmoil engulfing our country has to be ended before investors are forced to seek less risky alternatives.
“Foreign investors will only ramp up their investments if they are confident their assets are safe. They need political and economic certainty and must have confidence that there is rule of law in the countries in which they invest.”
High technology companies were the primary targets for inbound deals in South Africa, with 12 transactions, representing 200 per cent in deal volume and a deal value of $160 million, an increase of 1,997 per cent when compared to the same period last year.
“It’s no secret that African consumers have shown a growing reliance on technology across multiple platforms, even well before the pandemic struck.
“The growth of the digital economy across the continent has naturally been accelerated by the pandemic and this unabated demand for technology has caused extensive cross-sector disruption, with the financial, energy, transport, retail, health and agricultural sectors all seeking opportunities to expand their tech infrastructure in order to acquire the necessary skills and innovation needed to keep up with demand.
“Fintech is also a popular tech sector for investment across Africa and specifically in South Africa, Kenya and Nigeria, with health-tech, mobility and agritech also attracting growing interest,” Mr du Plessis noted.
“It looks like South Africa is leading the way in terms of high-value deals in the tech sector and we expect this tech M&A trend to continue as the continent gears up to operate in the post-pandemic new normal,” he added.
The United States was the primary investor for South African companies, with 16 deals (an increase of 60 per cent) valued at $496 million (an increase of 340 per cent).
This was helped by TPG Capital LP’s $200 million acquisition of Airtel Africa Plc-Mobile (telecommunications) announced in March 2021. The largest inbound deal in H1 2021 was Temasek Holdings (Pte) Ltd’s (Singapore) $500 million acquisition of Leapfrog Investments (financials), also announced in March 2021.
Kenya
In H1 2021, deal-making in Kenya decreased by 14 per cent with 18 deals in the period and deal value decreased by 96 per cent to $11 million.
Financial companies were the prime targets for inbound deals with five transactions, representing a 150 per cent increase, with deals valued at $11 million, a 78 per cent decrease.
Nigeria served as the primary investor for Kenyan companies with three deals. The largest inbound deal into Kenya in H1 2021 was Liberty Holdings Ltd’s (South Africa) $8 million acquisition of Liberty Kenya Holdings Plc (insurance), announced in March 2021.
In its reaction to this, Mr Du Plessis said the decrease in M&A volume and value in Kenya in H1 2021 is expected to be temporary as the country continues to implement pandemic recovery policies, including a vaccine rollout strategy for the adult population with a planned completion date of mid-2022.
“The country’s reputation as an East African investment hub, in addition to its strong technology capabilities, means that it is just a matter of time before Kenya takes up its rightful place as one of the top target countries for technology transactions in Africa,” he submitted.
By Dipo Olowookere
On the Nigerian Exchange (NGX) Limited last week, investors transacted 3.648 billion shares worth N220.568 billion in 251,861 deals compared with the 3.821 billion shares valued at N154.393 billion traded in 258,567 deals a week earlier.
Analysis showed that financial stocks led the activity chart with 2.899 billion units sold for N147.360 billion in 106,603 deals, accounting for 79.48 per cent and 66.81 per cent of the total trading volume and value, respectively.
Services equities recorded a turnover of 164.914 million units valued at N3.615 billion in 16,375 deals, and the consumer goods shares exchanged 157.451 million units worth N7.777 billion in 27,950 deals.
First Holdco, Zenith Bank, and Fidelity Bank were the busiest stocks for the five-day trading week, trading 1.745 billion units valued at N121.828 billion in 31,053 deals, contributing 47.85 per cent and 55.23 per cent to the total trading volume and value, respectively.
Business Post reports that 60 equities appreciated during the week versus 22 equities in the previous week, 28 shares depreciated versus 57 shares of the preceding week, and 58 stocks closed flat versus 67 stocks of the previous week.
International Breweries gained 40.00 per cent to trade at N13.30, RT Briscoe expanded by 32.02 per cent to N13.40, Livestock Feeds improved by 28.47 per cent to N9.25, First Holdco chalked up 25.82 per cent to close at N69.20, and Abbey Bank rose by 23.65 per cent to N9.15.
On the flip side, McNichols lost 28.57 per cent to finish at N5.00, Thomas Wyatt gave up 11.64 per cent to quote at N2.43, Geregu Power declined by 10.00 per cent to N825.70, CAP shed 9.99 per cent to settle at N157.60, and Guinness Nigeria also slipped by 9.99 per cent to N329.00.
Customs Street was under buying pressure last week, making the All-Share Index (ASI) and the market capitalisation close higher by 6.35 per cent to 243,798.76 points and N156.445 trillion, respectively.
In the same vein, all other indices finished higher apart from the growth and sovereign bond indices, which depreciated by 7.43 per cent and 0.02 per cent, respectively.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rose by 2.30 per cent, spurring the NASD Security Index (NSI) to close higher by 96.61 points to 4,296.34 points from 4,199.73 points, and raising the market capitalisation by N57.99 billion to N2.578 trillion from N2.521 trillion.
The market was up yesterday despite a lower activity level, as the volume of securities traded slumped by 94.7 per cent to 1.3 million units from the previous 23.9 million units. The value of securities slipped by 57.2 per cent to N29.2 million from the preceding session’s N68.2 million, while the number of deals executed by market participants increased by 6.7 per cent to 32 deals from the 30 deals carried out on Thursday.
At the close of transactions, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with a turnover of 3.4 billion units worth N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion in trades, and Central Securities Clearing System (CSCS) Plc with 70.8 million units traded for N4.9 billion.
GNI Plc was also the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
During the trading day, there were three price gainers and two price losers, led by Afriland Properties Plc, which shed N1.48 to sell at N15.17 per share compared with the previous session’s N16.65 per share, and Food Concepts Plc, which slid by 7 Kobo to close at N2.69 per unit versus N2.76 per unit.
Conversely, FrieslandCampina Wamco Nigeria Plc improved its value by N9.50 to trade at N150.00 per share compared with Thursday’s closing price of N140.50 per share, CSCS Plc went up by N7.95 to N89.65 per unit from N81.70 per unit, and 11 Plc soared by N6.94 to N206.95 per share from N200.01 per share.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited lost its footing by 0.07 per cent on Friday as a result of renewed profit-taking by investors.
The fall happened after Thomas Wyatt and Guinness Nigeria led other price losers group comprising 27 stocks at the market yesterday due to selling pressure.
Thomas Wyatt Nigeria shed 10.00 per cent to quote at N2.70, Guinness Nigeria drowned by 9.99 per cent to close at N329.00, Ikeja Hotel slipped by 9.96 per cent to N42.50, Zichis shed 9.94 per cent to trade at N26.37, and McNichols depreciated by 9.91 per cent to N5.00.
On the flip side, International Breweries gained 9.92 per cent to finish at N13.30, NEM Insurance appreciated by 9.61 per cent to N27.95, Jaiz Bank grew by 6.36 per cent to N9.20, UPDC expanded by 6.33 per cent to N4.20, and Livestock Feeds increased by 6.32 per cent to N9.25.
Business Post reports that investor sentiment remained bullish despite the loss recorded during the session, as there were 27 price decliners and 30 price advancers, representing a positive market breadth index.
Yesterday, market participants transacted 441.3 million equities for N19.4 billion in 44,938 deals compared with the 1.7 billion equities worth N112.0 billion traded in 44,780 deals a day earlier. This showed that the trading volume contracted by 74.04 per cent, the trading value declined by 82.68 per cent, and an uptick in the number of deals by 0.35 per cent.
Access Holdings led the activity chart on Friday after selling 40.2 million shares valued at N1.0 billion, Sterling Holdco traded 30.3 million stocks worth N228.8 million, Fidelity Bank sold 26.3 million equities for N505.6 million, Zenith Bank transacted 22.3 million shares valued at N2.5 billion, and First Holdco exchanged 19.0 million stocks worth N1.3 billion.
During the last trading session of the week, the consumer goods sector rose by 0.49 per cent, the insurance counter increased by 0.06 per cent, and the industrial goods index closed flat, while the banking and energy indices lost 0.78 per cent and 0.52 per cent, respectively.
As a result, the All-Share Index (ASI) shrank by 159.97 points to 243,798.76 points from 243,958.73 points, and the market capitalisation moderated by N103 billion to N156.445 trillion from N156.548 trillion.
