Value of M&As in East Africa falls on slow start to year

April 4, 2016

The value of mergers, acquisitions, private equity and capital raising deals in East Africa has shrunk in the first two months of the year compared to last year in the absence of big ticket deals that boosted inflows last year.

Data compiled by Burbidge capital shows there has been a total of 15 deals in January and February compared to 21 over the same period last year.

The disclosed value of deals in the region stands at $193 million (Sh19.3 billion) this year, compared to incoming deals worth $1 billion (Sh101 billion) recorded in the first two months of 2015.

There was also $498 million (Sh49.8 billion) worth of private equity exits from the market last year.

Kenya has accounted for 10 of the 15 deals done this year, valued at $150.8 million (Sh15 billion).

“15 corporate deals with a combined value of about $200 million have been done already. The deals are primarily private M&A and private equity deals, with one or two public markets transactions coming through as markets stabilise a little and another election (Uganda) is done in the region,” said Burbidge Capital in the February financial review.

Last year, the numbers were hugely boosted by big-ticket deals when Helios Partners sold their stake in Equity Bank in a deal that eventually raised Sh50 billion and UK-based Old Mutual’s purchase of a controlling stake in UAP Holdings from Centum, Mr Chris Kirubi, Abraaj, AfricInvest and Swedfund for Sh25 billion.

Disclosed deals this year include the Sh300 million investment by venture capital firms TED, MKS Alternative Investments and Synergy Energy in BRCK, a Kenyan company which manufactures routers and modems.

Old Mutual Group has also made a Sh6.4 billion investment in Centum’s Two Rivers Lifestyle Centre, the holding company for the Two Rivers Mall.

There are also a number of deals whose value has not been disclosed including the buyout of a majority stake in Nairobi-based air freight forwarder Airflo by Swiss logistics giant Panalpina and Indian conglomerate Godrej Consumer Products’ purchase of a majority stake in Canon Chemicals, the makers of Valon petroleum jelly and Styles Industry Ltd which makes hair products.

Upcoming deals expected to boost the total for 2016 include the ARM equity stake sale to a strategic investor for Sh14 billion, the listing of KShoe and St Paul’s Properties trust on the NSE, and the IPO of Tanzanian power distributor Tanesco.

UK PE firm Duet has also indicated it will invest Sh1.98 billion for an equity stake in Fidelity Commercial Bank pending regulatory approval. Source: Asoko Insight