Merger and Acquisition
Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$ 129.7 Billion in 2021
Refinitiv today released the 2021 investment banking analysis for the Sub-Saharan African. According to the report, an estimated US$506.0 million worth of investment banking fees were generated in Sub-Saharan Africa during 2021, 8% less than in 2020 and the lowest annual fee total in the region since 2014. While debt capital markets underwriting fees increased 128% to US$150.3 million, the highest full year total since our records began in 2000, fees from equity capital markets underwriting, M&A advisory and syndicated lending all declined from 2020.
Equity fees declined 35% to US$56.9 million, while syndicated lending fees declined 17% to US$216.0 million. Advisory fees earned in the region from completed M&A transactions reached US$82.9 million, down 38% year-on-year to the lowest annual total since 2003. Fifty-five percent of all Sub-Saharan African fees were generated in South Africa during 2021, and 25% were earned from deals in the financial sector. Standard Chartered earned the most investment banking fees in the region during 2021, a total of US$37.7 million or a 7.5% share of the total fee pool.
MERGERS & ACQUISITIONS
The value of announced M&A transactions with any Sub-Saharan African involvement reached US$129.7 billion during 2021, more than four-times the value recorded during 2020 and the highest full-year total since our records began in 1980. The high dollar-value was boosted by the Naspers/Prosus share swap in May, and Redefine Properties’ offer for the remaining shares in retail property company EPP, which together were worth a more than US$70 billion. The number of deals increased 13% from 2020 to a four-year high of 853.
M&A involving a Sub-Saharan African target reached US$79.6 billion, again lifted by the share swap to an all-time record annual total, while the number of deals increased 21% over the previous year. Inbound deals, involving an acquiror outside of Sub-Saharan Africa, increased 164% to US$20.1 billion, while outbound M&A reached an all-time high of US$42.3 billion.
High technology was the most targeted sector by value in Sub-Saharan Africa during 2021, while the materials sector saw the highest number of deals in the region. South Africa was the most targeted nation, with US$63.7 billion in M&A announcements over the year, equivalent to 80% of total activity recorded in the region.
With advisory work on deals worth a combined U$52.1 billion, Morgan Stanley held the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during 2021.
EQUITY CAPITAL MARKETS
Sub-Saharan African equity and equity-related issuance reached US$1.4 billion during 2021, down 43% compared to 2020 and the lowest annual total since 2005. The number of issues declined 38%, again to a 16-year low. Issuers in South Africa raised more in the equity capital markets than any other Sub-Saharan African nation during 2021, a total of US$979.6 million, followed Mauritian and Ugandan issuers.
Follow-on offerings raised US$1.3 billion in 2021 with Pepkor Holdings, Lighthouse Capital and financial services group FirstRand Ltd among those in the region raising new equity funds from follow-ons in 2021. Just one initial public offering was recorded in the region during 2021, MTN Uganda raised U$163.0 million listing on the Uganda Securities Exchange in December. Investec and Goldman Sachs share first place in the Sub-Saharan African ECM underwriting league table during 2021, each with a 24% market share.
DEBT CAPITAL MARKETS
Sub-Saharan African debt issuance totalled US$43.5 billion during 2021, up 125% from the value recorded during 2020 and the highest full-year total since our records began in 1980. The number of new offerings brought to market increased 46% over 2020 to a four-year high of 73. South Africa was the most active issuer nation during 2021, accounting for 26% of total bond proceeds, followed by Ivory Coast and Nigeria with 22% and 16%, respectively. DCM activity from Government & Agencies accounted for 51% of issuance during full year 2021, while financial sector issuance accounted for 26%. Citi took the top spot in the Sub-Saharan African bond book runner ranking during 2021, with US$6.7 billion of related proceeds, or a 16% market share.
Merger and Acquisition
Chad Nationalizes Exxon Mobil Assets Amidst Controversy
The Chadian government has announced that it has nationalized all assets and rights, including hydrocarbon permits and exploration and production authorizations, that belonged to Exxon Mobil’s subsidiary in the country.
The move comes after Exxon Mobil closed the sale of its operations in Chad and Cameroon to London-listed Savannah Energy in a $407 million deal in December.
However, the Chadian government contested the agreement, stating that the final terms were different from what Exxon Mobil had presented. It warned that it may ask courts to block Savannah’s purchase of Exxon’s assets in the country and take further steps to protect its interests.
The nationalized assets include a 40% stake in Chad’s Doba oil project, which comprises seven producing oilfields with a combined output of 28,000 barrels per day. It also includes Exxon’s interest in the more than 1,000 kilometer Chad/Cameroon pipeline from the landlocked nation to the Atlantic Gulf of Guinea coast through which its crude is exported.
Exxon Mobil and Savannah Energy were not immediately available for comment on the matter.
This move by the Chadian government is not entirely surprising given the controversy surrounding the sale of Exxon Mobil’s assets to Savannah Energy. It remains to be seen what actions the government will take to protect its interests and whether Savannah Energy will be able to proceed with its purchase of Exxon’s assets in Chad.
The nationalization of Exxon Mobil’s assets in Chad is part of a broader trend of governments taking greater control of their natural resources. Many countries in Africa and beyond have been pushing for greater control over their resources and a larger share of the profits generated by foreign companies operating in their territories.
As natural resources become increasingly important in the global economy, it is likely that we will continue to see governments taking a more assertive approach to the management of their resources. The challenge for companies like Exxon Mobil will be to navigate these complex and evolving political landscapes while also delivering value to their shareholders.
Merger and Acquisition
HSBC Purchases Silicon Valley Bank U.K Subsidiary, Protects Customer’s Deposits
British multinational universal bank and financial services holding company HSBC Holdings plc has acquired Silicon Valley Bank U.K subsidiary for £1 ($1.21).
HSBC disclosed that the acquisition will help strengthen its franchise in the U.K, noting that all depositors’ money with SVBUK is safe and secure and that all operations will continue as normal.
The company said in a statement, “This action has been taken to stabilize Silicon Valley Bank UK, ensuring the continuity of banking services, minimizing disruption to the UK technology sector, and supporting confidence in the financial system.
“The bank and HM treasury can confirm that all depositor’s money with SVB UK is safe and secure as a result of this transaction. SVB UK’s business will continue to be operated normally by SVB UK. All services will continue to operate as normal, and customers should not notice any changes”.
HSBC’s acquisition of Silicon Valley Bank British arm is coming after a host of potential buyers had submitted proposals to purchase the bank since the failure of its U.S. parent company, amid widespread concern over the immediate future of many British technology and life sciences startups.
Bank of London CEO Anthony Watson disclosed that Silicon Valley Bank cannot be allowed to fail, given the vital role it plays in the community. He added, “this is a unique opportunity to ensure the U.K has a more diversified banking sector, whilst allowing continuity of service to SVB’s U.K client base. It would be deeply disappointing for this moment to lead to further consolidation of power among big banks”.
The acquisition of SVB U.K. subsidiary comes after the bank which specialized in lending funds to technology startups, witnessed a financial implosion on Friday last week, making it the largest U.S. bank failure since the global financial crisis more than a decade ago, Investors King understands.
Silicon Valley Bank’s financial implosion began late Wednesday when it informed investors with the unpleasant news that it needed to raise $2.25 billion to shore up its balance sheet. This spurred customers to withdraw a staggering $42 billion of deposits by the end of Thursday, leading to the collapse of the bank.
Analysts predict that the slump of Silicon Valley Bank could be far-reaching which would see Startups faced with several challenges such as paying employees’ salaries, venture investors struggling to raise funds, massive cost cuts, etc.
Merger and Acquisition
Andela Procures Tech Platform Qualified, Set to Accelerate Its Ability to Source For Tech Talent
A startup that trains developers in Africa and hires them out to global tech companies Andela, has recently acquired a tech skills assessment platform Qualified to accelerate its ability to source and assess talent.
The acquisition of qualified will see Andela’s global tech community expand with the addition of more than 3.5 million engineers via Codewars, an online educational community for computer programming powered by Qualified.
Speaking on the recent acquisition of Qualified, Co-founder of Andela Jeremy Johnson said,
“This acquisition will help Andela expand and accelerates its ability to source and expertly assess talent. Labor marketplaces are constrained by inefficiencies between supply, demand, and quality. Qualified allows us to address those inefficiencies by providing the certified right talent at the right time. Companies will continue to trust that talent sourced through Andela has the needed skills regardless of where they live and work.”
Also speaking on its collaboration with Andela, the Co-founder, and CEO of Qualified Jake Hoffner said, “The tech industry has historically relied on hiring practices that have proven to be ineffective. The expanded platform will allow companies to create hiring processes for software engineers that are predictive of their on-the-job performance. In addition, we provide companies and our growing tech community a bigger, broader, and better opportunity to connect globally.”
Founded nearly a decade ago on the premise that brilliance is evenly distributed but opportunity is not, Andela’s recent acquisition of Qualified, has considerably accelerated the road ahead to ensure that the right tech talents are connected to the right opportunities.
With the biggest challenge hiring managers face in determining how can they know a new hire will succeed, Qualified, as the top technical assessment platform, will accelerate Andela’s ability to solve this problem and thereby raise the probability of success for a new hire by certifying their skills before the engagement begins.
It is interesting to note that Qualified is a leader in this space, enterprise companies like Meta, Zoom, and Dominos already trust them to assess their internal talent.
Investors King understands that Andela is keenly aware of the role AI will play with its recent acquisition, and it believes that the capabilities of Qualified would move it towards a more predictive matching process on its platform.
Andela’s procurement of Qualified will now not only provides access to global talent but raise and standardize the bar at which those engineers are certified. It is interesting to note that in 2017, Qualified and Andela first joined forces to build up Africa’s tech ecosystem. Using Qualified’s developer assessments, Andela successfully assessed over 19k developers.
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