Value of merger and acquisition deals in SA leap 958% in first half
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MERGERS and acquisitions (M&A) raked in $52 billion (R760.8bn) in the first half of the year in South Africa, with the value of deals leaping by a whopping 958 percent, and being technology transactions the most sought after.
According to the latest analysis of Refinitiv data, a London Stock Exchange Group that provides financial markets data and infrastructure, the value of M&A transactions in the country in the first half totalled 169. Volumes, however, slid by 8 percent compared to the corresponding period last year.
The data highlighted that the Covid-19 pandemic had boosted inbound investment in South African technology firms with 12 tech transactions, representing a 200 percent increase in deal volume year on year valued at $160 million, an increase of 1 997 percent when compared to the same period last year.
The analysis showed that the US was the primary investor for South African companies, with 16 deals, an increase of 60 percent year-on-year, valued at $496 million, an increase of 340 percent year-on-year.
This was helped by TPG Capital LP’s $200m acquisition of Airtel Africa-Mobile (telecommunications) announced in March 2021.
The largest inbound deal in the period was Temasek Holdings’ (Singapore) $500m acquisition of Leapfrog Investments (financials), also announced in March 2021.
“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,” Refinitiv said.
Wildu du Plessis, the head of Africa for deal maker Baker McKenzie, said the growth of the digital economy across Africa had been accelerated by the pandemic, and the unabated demand for technology had caused extensive cross-sector disruption.
The financial, energy, transport, retail, health and agricultural sectors were all seeking opportunities to expand their tech infrastructure in order to acquire the necessary skills and innovation needed to keep up with demand.
“It’s no secret that African consumers have shown a growing reliance on technology across multiple platforms, even well before the pandemic struck.
“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,” Du Plessis said.
Refinitiv data shows that the volume of domestic transactions increased slightly to 80 deals, a 10 percent increase y-o-y.
Domestic transactions in South Africa in the first half of this year were worth $46.7bn, a dramatic 2 148 percent y-o-y increase.
Further, cross-border transactions increased 17 percent y-o-y to 89 deals, with deal value surging 251 percent to $5.4bn.
Marc Yudaken, a partner in the Corporate/M&A Practice at Baker McKenzie, said: “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,” he said.