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Merger and Acquisition

Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$16 Billion in the First Nine Months of 2020

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Mergers and Acquisition Transactions Stood at US$16 billion in the First Nine Months of 2020 in Sub Saharan Africa

Refinitiv today released the investment banking analysis for the Sub-Saharan African for the first nine months of 2020. According to the report, investment banking fees in Sub-Saharan Africa reached an estimated US$40.9 million during the third quarter of 2020, less than half the value recorded during the second quarter of 2020 and the lowest quarterly total since Q1 2005. Around US$264.6 million worth of fees were earned in the region during the first nine months of 2020, down 38% from last year and a seven-year low with fee declines recorded across M&A advisory, debt capital markets underwriting, and syndicated lending.

Advisory fees earned from completed M&A transactions generated US$51.4 million, down 71% year-on-year to the lowest first nine-month level since 2003. Debt capital markets underwriting fees declined 19% to US$46.6 million, marking the lowest first nine-month total for bond fees in the region since 2016, while syndicated lending fees fell 35% to a six-year low of US$105.2 million. Equity capital markets underwriting fees totalled US$61.4 million, more than double the value recorded during the same period in 2019.

Government & Agency fees accounted for 22% of total investment banking fees earned in the region so far during 2020, up from 12% during the same period last year. South Africa generated the most fees in the region, a total of US$160.2 million accounting for 61%, followed by Nigeria with 12%.

Standard Chartered earned the most investment banking fees in the region during the first nine months of 2020, a total of US$23.4 million, or an 8.8% share of the total fee pool.

MERGERS & ACQUISITIONS

The value of announced M&A transactions with any Sub-Saharan African involvement reached US$16.0 billion during the first nine months of 2020, 74% less than the value recorded during the same period last year when Naspers’ US$35.9 billion internet assets spin-off boosted merger activity to an all-time high. The value of deals recorded so far this year is the lowest year-to-date total since 2004. The number of deals declined 11% over the same period to a seven-year low. The value of deals with a Sub-Saharan African target declined 58% to a seventeen-year low of US$7.9 billion, as domestic M&A within the region declined 69% from last year and the combined value of inbound deals reached just US$5.2 billion, the lowest first nine-month level in five years. The largest deal involving a Sub-Saharan African target was announced at the start of September – US pharmaceuticals firm Mylan agreed to buy the thrombosis business from South African drugmaker Aspen Pharmacare for US$758.5 million. Deals in the energy and power sector accounted for 26% of Sub-Saharan African target M&A activity during the first nine months of 2020, followed by materials (23%) and financials (14%). South Africa was the most targeted nation, followed by Uganda and Senegal.

Outbound M&A reached a four-year high of US$4.6 billion during the first nine months of 2020, 80% more than the value recorded during the same period in 2019, despite an 11% decline in the number of deals. The value was boosted by Angolan state-owned Sonangol’s purchase of PT Ventures from Africatel Holdings for US$1 billion and Templar Investments’ US$1 billion offer for Jindal Steel’s Oman unit.

With advisory work on eleven deals worth a combined U$1.7 billion, JP Morgan holds to the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during the first nine months of 2020.

EQUITY CAPITAL MARKETS

Sub-Saharan African equity and equity-related issuance reached US$2.0 billion during the first nine months of 2020, 25% more than the value recorded during the same period last year, but lower than every other first nine-month total since 2013. The number of deals recorded declined by 10% to the lowest year-to-date tally since 2012. One initial public offering has been recorded so far this year, compared to three at this time last year. Malawian telecoms company, Airtel Malawi, raised US$28.7 million on the Malawi Stock Exchange in February.

JP Morgan took first place in the Sub-Saharan African ECM underwriting league table during the first nine months of 2020.

DEBT CAPITAL MARKETS

The African Development Bank raised $3 billion in a “Fight Covid-19” social bond at the end of March to help alleviate the economic and social impact the Coronavirus pandemic will have on livelihoods and economies in the region. With this deal, and Ghana’s US$3 billion Eurobond in February, Sub-Saharan African debt issuance totalled US$8.9 billion during the first quarter of 2020, the second-highest first quarter DCM total in the region of all-time.

Only US$1.9 billion was raised during the second quarter, the lowest quarterly total in eight years, followed by US$4.0 billion during the third quarter. The total proceeds raised during the first nine months of 2020 is US$14.7 billion, down 26% from last year and a five-year low. BofA Securities took the top spot in the Sub-Saharan African bond underwriter ranking during the first nine months of 2020 with US$2.2 billion of related proceeds, or a 15% market share.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Merger and Acquisition

Moody’s Acquires 100% Stake in GCR Ratings

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Global Credit Rating Company Limited (GCR) is pleased to announce that Moody’s Corporation (NYSE: MCO) has increased its stake in GCR to 100%, following a 51% acquisition in 2022.

GCR is a leading credit rating agency in Africa with a broad geographic footprint that includes South Africa, Nigeria, Senegal, Kenya, and Mauritius.

GCR’s 28-year proven track record and successful domestic operations across the African continent, together with Moody’s international expertise represents a unique opportunity to contribute to the development of capital markets and the wider economies across Africa. GCR expects this acquisition will further solidify its position as a leading provider of quality, objective and independent credit opinions in African markets.

Commenting on the acquisition, Marc Joffe, Chief Executive of GCR, said,

“The full acquisition of GCR by Moody’s is an important milestone that will enable us to build on our deep local market insights and over a quarter century of growth across the African continent. It will also provide the opportunity to further develop solutions that meet a range of customer needs, including credit ratings, credit risk solutions, and ESG (environmental, social and governance factors) capabilities”.

Following the acquisition, GCR will continue to use its own ratings methodologies, issue its own credit ratings and maintain a separate management team.

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Merger and Acquisition

Oando Secures 100% Stake in Nigerian Agip Oil Company, NUPRC Announces

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Oando PLC has completed the acquisition of 100% of the shares of Nigerian Agip Oil Company Limited (NAOC Ltd).

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirmed the completion of the deal on Wednesday.

NUPRC Chief Executive, Engineer Gbenga Komolafe, made the announcement at the ongoing Oil and Gas Energy Week in Abuja, a significant event sponsored by the Nigerian National Petroleum Company (NNPC) Limited and other industry stakeholders.

The acquisition marks a significant milestone for Oando, a leading indigenous energy solutions provider, solidifying its position in Nigeria’s oil and gas sector.

“This acquisition is a testament to Oando’s commitment to expanding its footprint in the upstream sector,” said Komolafe. “The divestment agreement with ENI, which includes the full acquisition of NAOC Ltd, has been successfully finalized, and we look forward to the signing ceremony in the coming days.”

The NAOC deal is part of a broader wave of acquisitions and divestments within Nigeria’s oil industry, reflecting a dynamic shift in the sector.

Alongside Oando’s acquisition, other major transactions include Equinor’s completed deal with Project Odinmin and the ongoing due diligence for Shell Petroleum Development Company of Nigeria Limited’s (SPDC) transaction with the Renaissance Consortium.

Seplat Energy Offshore Limited is also advancing its proposed takeover of ExxonMobil Nigeria’s offshore shallow water operations, pending ministerial consent.

Oando’s acquisition of NAOC significantly boosts its operational capacity, increasing its participating interests in key Oil Mining Leases (OMLs) from 20% to 40%.

This strategic move not only enhances Oando’s production capabilities but also positions the company to leverage new opportunities in Nigeria’s oil-rich regions.

The NUPRC has emphasized the importance of adhering to regulatory frameworks to ensure smooth transitions and protect national interests.

Komolafe highlighted that while divestments are the right of investors, they must be conducted within the rule of law and best practices to avoid the pitfalls experienced by other countries.

“Countries like Brazil, Canada, and the UK have faced challenges with divestments that were not well-managed,” Komolafe noted. “We aim to avoid similar issues by ensuring that divestments in Nigeria are carried out with thorough due diligence, safeguarding financial capacity, technical capability, and environmental responsibilities.”

Oando’s acquisition aligns with Nigeria’s broader energy strategy, which includes diversifying its energy portfolio and attracting foreign investment.

The country is also focusing on becoming a hub for green hydrogen production, leveraging its abundant solar radiation to support Europe’s energy needs.

As Oando takes the helm of NAOC, the company is expected to drive initiatives that enhance oil production and contribute to sustainable energy solutions.

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Merger and Acquisition

Exxon Mobil’s Sale to Seplat Progresses After NNPC Drops Legal Challenge

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The Nigerian National Petroleum Corporation (NNPC) has withdrawn its legal challenge against Exxon Mobil Corp.’s sale of its oil and gas assets to Seplat Energy Plc.

This decision eliminates a major obstacle that had stalled the completion of the $1.3 billion deal.

The NNPC submitted an application to the high court in Abuja to discontinue the case, as confirmed by its legal firm, Afe Babalola, in an email on Thursday.

This move follows an agreement reached last month between NNPC and Exxon Mobil to finalize the transaction under undisclosed terms.

However, court documents reviewed by Bloomberg reveal that NNPC retains the right to resume its legal challenge if the settlement terms are not honored.

The sale, initially signed in February 2022, still requires approvals from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which has set an August deadline, and from Nigerian President Bola Tinubu.

The NNPC’s withdrawal significantly advances the deal but does not mark its final hurdle.

The addition of Exxon Mobil’s blocks will significantly enhance Seplat’s portfolio, almost quadrupling its output to over 130,000 barrels per day.

This acquisition is set to bolster Seplat’s status as one of the leading suppliers of domestic gas to Nigerian power plants, fortifying its influence in the region.

In a parallel development, Shell Plc’s divestment of its Nigerian onshore oil business to a consortium of local firms, valued at over $1.3 billion, also awaits regulatory approval after being announced in January.

Both deals highlight the ongoing restructuring and consolidation within Nigeria’s oil and gas industry, aimed at increasing efficiency and local participation.

As Nigeria navigates these substantial industry shifts, the successful completion of the Exxon Mobil-Seplat deal will be a critical indicator of the nation’s ability to manage large-scale energy transactions.

It will also set a precedent for future agreements and regulatory processes in the country’s vital oil and gas sector.

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