Severe drop in fees generated in sub-Saharan region, data shows
CAPE TOWN - INVESTMENT banking fees generated in sub-Saharan Africa fell 39 percent in the first three months of 2021 to the lowest quarter total since 2014.
Data from Refinitiv released yesterday showed that an estimated $99.3 million (R1.45 billion) worth of investment banking fees were generated in the region during the quarter.
Refinitiv, a subsidiary of the London Stock Exchange Group, is a wellknown global provider of data services.
The group said advisory fees earned in the region from completed M&A (mergers and acquisitions) transactions reached $15.5m, down 65 percent from last year to the lowest first-quarter total since 2005.
The value of M&A transactions with any sub-Saharan African company involvement reached $6.1bn, almost level with the same period in 2020, and a five-year low.
Refinitiv said the number of deals fell 14 percent to the lowest first-quarter tally since 2014.
It said M&A involving a sub-Saharan African target increased 73 percent to $4.3bn. Domestic deals increased 67 percent to $2.5bn, while inbound deals, involving an acquirer outside of sub-Saharan Africa, increased 83 percent to $1.8bn.
Sub-Saharan African outbound M&A totalled $721.4m, down 66 percent year-on-year to the lowest first-quarter level in six years.
The Zambia government, through its mining investment arm ZCCM Investment Holdings, acquired Mopani Copper Mines for $1.5bn, the largest deal in the region to be announced so far during 2021.
With advisory work on deals worth $668.5m, BofA Securities held top spot in the financial adviser ranking for deals with any sub-Saharan African involvement in the first quarter.
Debt capital markets underwriting fees doubled to $47.1m, the highest first-quarter total since Refinitiv’s records began in 1980.
Fees from equity capital markets underwriting, M&A advisory and syndicated lending all declined from the first quarter of 2020.
Equity fees declined 42 percent to $21.8m, while syndicated lending fees declined 74 percent to $15m.
Seventy-two percent of all sub-Saharan African fees were generated in South Africa during the first quarter, and 39 percent were earned from deals in the financial sector.
B Riley Financial Inc earned the most investment banking fees in the region of $19.8m during the first quarter of 2021, or a 20 percent share of the total fee pool.
Boston Consulting Group Johannesburg MD Alexis Bour said in a statement that they anticipated investment deal volume and value in Africa to slump as much as 40 percent in 202021 due to the impact of the Covid-19 pandemic.
However, Bour said they anticipated a slow recovery of deal flow in the next 18 to 24 months in line with GDP growth expectations, to reach 2019 M&A value and volumes in three to five years. In 2019, Africa’s M&A activity made up 2 percent of global M&A valued at $1.3 trillion.