"After peaking in 2007, deal activity is finally starting to reach
pre-recession levels in Africa, according to a new report by investment
adviser RisCura.
In 2013, 991 deals were reached in Africa as the region attracted the
interest of investors from the U.K., France, Switzerland, India, China,
Hong Kong and the United Arab Emirates.
Last year, the volume of transactions was the highest since 2007,
where M&A activity peaked at 1,019. The hottest industries have been
financials, materials and energy.
“2012 shows a major uptick in international investor confidence in
the continent,” RisCura said in its report, dubbed Bright Africa,
released on Wednesday.
However, at $30 billion, the total value of these transactions is
still far off the $58.2 billion reached seven years ago, and
London-based RisCura says that indicates a full recovery has not yet
transpired.
“In 2013, Asian investment increased, but not enough to offset dips
in investment from other regions,” the Africa-focused investment group
said.
A majority of reported deals occur in South Africa, but RisCura says
it is “very likely” there is unreported activity in less developed
countries, including Egypt, Nigeria, Morocco, Kenya, Tunisia and Ghana.
In fact, over the last three years, transactions grew by about 10% in
Nigeria, in line with South Africa. In Kenya, they grew by about 8%.
This comes as foreign direct investment flows to developing economies
– far more than more developed regions. Foreign direct investment flows
to developing countries reached a fresh high of $759 billion in 2013,
according to data from RisCura.
“There is a higher level of attention on Africa from around the
world,” said Rory Ord, the advisor group’s head of private equity.
“Private equity managers have set up shop across all parts of the
continent.”
Broader equity investing has also been on the rise, fueled by the
fact that listed markets in Africa are evolving and trading conditions
are improving.
While trading costs in smaller economies such as Zimbabwe are still
relatively high, they have steadied in larger markets, particularly
Nigeria and Kenya.
RisCura says costs in lesser developed countries will eventually be
reduced as well, especially as liquidity increases and their economies
advance. "
