Dealmaking in Africa slows further

The value of inbound investment fell by 31 percent in the third quarter of 2019.

The dealmaking environment in Africa softened further in the third quarter of the year after a weaker first half of 2019, in line with global Mergers & Acquisitions (M&A) activity.

Deal Dynamics data shows that the value of inbound investment in Africa fell by 31 percent in the third quarter of 2019 when compared to the same period a year before. During this three months 72 deals worth $3.62 billion were done. In volume terms deals were 21 percent lower.

The value of inbound investment in Africa fell by 35 percent in the first half of 2019 when compared to the same period a year before. Year to date 229 deals worth $15.7 billion were done in Africa, 11 percent lower in value terms compared to the same nine months in 2018.

Global M&A activity totalled US$755.9 billion in Q3 2019, a 13 percent decrease on Q3 2018. The M&A market is being impacted by global trends such as high volatility, concerns about trade and protectionism, and geopolitical instability. This comes as after global M&A hit $3,5 trillion in 2018, making it the third-largest year on record for M&A by value¹.

Deal Dynamics data shows that the value of Africa outbound investment also fell, by 76 percent, in the third quarter of 2019 when compared to the same period a year before. During the period 27 deals worth $381 million were done. In volume terms outbound deals were 16 percent lower.

The value of Africa outbound investment decreased by 76 percent in the first half of 2019 when compared to the same period a year before. Year to date 94 deals worth $2.7 billion were done, 72 percent lower (in value) than the same nine months in 2018.

Cross-border M&A is defined as any M&A activity, when the target company (or assets being sold) in the deal is not located in the same country as the acquirer ultimate parent. Inbound activity shows data for all cross-border M&A deals according to where the target company or target company business is located. Outbound activity shows data for all cross-border M&A deals according to where the buyer is located.

Intraregional deals in Africa for the period improved significantly, with 174 percent, in value terms compared with the corresponding period a year before. In total 95 deals were done worth $2.73 billion. In volume terms deals were 3 percent higher in the period.

This comes after intraregional deals in Africa for the first six months of the year improved slightly, with 6 percent, in value terms compared with the corresponding period a year before. In terms of year to date, 278 intraregional deals in Africa were done with a value of $10.51 billion, a 44 percent increase compared to the first nine months in 2018.

Intraregional M&A is defined as any M&A activity where the target company and the buyer are located in the same region, i.e. in Africa. The top sector in Africa in terms of inbound deals for the third quarter was the Consumer sector, worth $2.45 billion.

In terms of intraregional deals the top sector, with deals of $1.87 billion, was the Real Estate sector. The top sector in Africa in terms of outbound deals for the period was the Energy and Natural Resources Sector, worth $133 million.

Deal Dynamics is an interactive data tool with exclusive editorial content providing analysis and insights on global M&A. The data is sourced from Refinitiv’s proprietary M&A deals database which tracks changes in economic ownership at ultimate parent level in going business concerns. All deals involving a purchase of at least a 5 percent stake, or 3 percent with a value of at least US$1 million, are tracked, subject to criteria.

Sources:

1.     Since 2001; Mergermarket 2018 Global M&A report, 3 January 2019.