Refinitiv today released the first quarter 2022 investment banking analysis for the Sub-Saharan African. According to the report, an estimated US$97.3 million worth of investment banking fees were generated in Sub-Saharan Africa during the first quarter of 2022, down 9% from the same period in 2021 and the lowest first quarter total since 2014.
The value of announced M&A transactions with any Sub-Saharan African involvement reached US$7.0 billion during the first three months of 2022, 13% less than the value recorded during the same period in 2021 and a four-year low, despite an 11% increase in the number of deals. Sub-Saharan African equity and equity-related issuance totalled US$496.9 million during the first quarter of 2022, compared to just US$18.4 million during the same period last year. Sub-Saharan African debt issuance totalled US$9.4 billion during the first quarter of 2022, down 30% from the value recorded during the same period in 2021, although historically high with only 2018 and 2021 registering higher first quarter totals.
INVESTMENT BANKING FEES
Equity capital markets underwriting fees declined 1% to US$8.8 million, the lowest first quarter total in twelve years. Debt capital markets fees declined 16% from last year’s record start to US$40.7 million, while syndicated lending fees declined 81% to US$6.3 million. Advisory fees earned in the region from completed M&A transactions reached a three-year high of US$41.4 million, an increase of 163% compared to the first three months of 2021. Seventy-nine percent of all Sub-Saharan African fees were generated in South Africa during the first quarter of 2022, and 33% were earned from deals in the High Technology sector. Goldman Sachs earned the most investment banking fees in the region during the first quarter of 2022, a total of US$11.4 million or an 11.7% share of the total fee pool.
MERGERS & ACQUISITIONS
Deals worth US$5.2 billion involved a Sub-Saharan African target, a 10% increase from the first quarter of 2021. While domestic deals declined 17% from last year, inbound deals involving a non-Sub-Saharan African acquiror increased 44% to US$3.0 billion, the highest first quarter total in five years. Meanwhile, Sub-Saharan African outbound M&A totalled US$776.0 million, less than half the value recorded during the same period last year and with a 15% decline in the number of deals. High technology was the most targeted sector by value in Sub-Saharan Africa during the first quarter of 2022, while the financial sector saw the highest number of deals in the region. South Africa was the most targeted nation, with US$2.5 billion in M&A announcements, equivalent to 48% of total activity recorded in the region. With advisory work on deals worth a combined U$1.8 billion, Goldman Sachs held the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during Q1 2022.
EQUITY CAPITAL MARKETS
All proceeds were raised by follow-on issuance with MTN Nigeria Communications and South African coal exporter Thungela Resources among those in the region raising new equity funds from follow-ons. No convertible or initial public offerings were recorded in the region. Issuers in Nigeria raised more in the equity capital markets than any other Sub-Saharan African nation during the first quarter of 2022, a total of US$277.1 million, while South African issuers raised a combined US$219.9 million. Morgan Stanley took first place in the Sub-Saharan African ECM underwriting league table during the first quarter of 2022 with a 23% market share, followed Java Capital with 13%.
DEBT CAPITAL MARKETS
The number of issues declined 43% from last year at this time. South African was the most active issuer nation during the first quarter of 2022, accounting for 59% of total bond proceeds, followed by Nigeria (22%) and Ivory Coast (14%). Issuers is the technology sector accounted for 56% of proceeds raised during the first three months of 2022, while government & agency issuers accounted for 27%. Citi took the top spot in the Sub-Saharan African bond bookrunner ranking during the first quarter of 2022, with US$1.7 billion of related proceeds, or an 18.1% market share.
Access Holdings Plc to Acquire Majority Stake in First Guarantee Pension Limited
Access Holdings Plc has agreed with First Guarantee Pension Limited to acquire a majority stake in the company in its drive to transform from a narrow banking business into a financial service company.
The leading financial institution stated in a press release obtained by Investors King on Thursday.
According to Access Bank, the transaction is in line with its strategy to evolve into a full-blown financial services company and gain relevant market share across Africa, global monetary centres and beyond banking verticals.
Speaking on the firm’s push to change the banking landscape, Dr. Herbert Wigwe, Group Chief Executive Officer, Access Corporation said “This transaction is a natural evolution for us. Over the last 20 years, we set our sights on and delivered ambitious plans to transform the African financial services landscape focusing on banking and have created the African leading Bank and largest bank by customer base.
“This large customer base both on the wholesale and retail segments makes the pension business a natural fit for the Corporation given its objective of ecosystem optimisation. We will leverage our well-established culture of strong corporate governance, risk management, cutting-edge technology, and digital capabilities to deliver high standards of professionalism in the management of pension assets to the benefit of our stakeholders.”
The firm added that the National Pension Commission and the Central Bank of Nigeria have given their no objection to the transaction.
FBN Holdings to Acquire Access Pension Fund Custodian Limited
FBN Holdings Plc on Wednesday announced it entered into a definitive agreement with Access Bank Plc to acquire 100% Share Capital of Access Pension Fund Custodian Limited held by Access Bank Plc.
The acquisition would be done through First Pension Custodian Limited, a subsidiary of FBNH, the bank disclosed this in a statement signed by Adewale L.O Arogundade, Ag. Company Secretary and obtained by Investors King.
According to FBN Holdings, the Central Bank of Nigeria and the National Pension Commission have given their no objection to the transaction, with completion subject to the receipt of all required regulatory approvals.
The statement reads, “FBN Holdings wishes to notify Nigerian Exchange Limited and investing public that First Pension Custodian Limited, a subsidiary of FBNH’s flagship subsidiary, First Bank of Nigeria Limited has entered into a definitive agreement with Access Bank Plc for the planned acquisition by First Pension of 100% Share capital of Access Pension Fund Custodian Limited held by Access Bank Plc.
Helios Investment Partners and Sojitz Corporation Start Collaborations in West African Gas Downstream Businesses
Helios Investment Partners (“Helios”), the Africa-focused private investment firm, acting on behalf of funds it advises, and Sojitz Corporation (“Sojitz”), one of the leading conglomerate investment and trading houses listed on the Tokyo Stock Exchange, announced the completion of the sale by Helios of a 25% interest in the holding company of Axxela, the largest private-sector gas distributor in Nigeria, to Sojitz. Helios retains a 75% interest in the company.
This transaction marks Sojitz’s first significant equity investment in Africa, indicating its growth ambitions on the continent and serving as a blueprint for future collaboration in Africa between Helios and Sojitz across a range of sectors. As like-minded shareholders, Helios and Sojitz expect to accelerate further growth of Axxela’s business by leveraging Sojitz’s expertise in developing gas and power infrastructure projects and providing lower-carbon energy solutions to industrial customers globally.
Axxela is a pioneering energy infrastructure company at the forefront of delivering cleaner, cheaper and more reliable energy to industrial customers across West Africa. Its operations support the utilisation of Nigeria’s vast domestic gas resource to drive industrial growth while also facilitating fuel switching by industries to gas, reducing CO2, Nitric Oxide and Sulfur Oxide emissions, which enables the transition to a lower carbon economy. Axxela enabled its customers to reduce their CO2 emissions by 1.7 million tonnes between 2018 and 2020 by switching their energy supply from diesel or Heavy Fuel Oil (HFO) to gas and will expand such contribution to reduce CO2 emissions through the growth of its business.
Axxela Group began operations in 2001 and currently serves over 200 industrial customers across key industrial hubs in Lagos, Port Harcourt, and Sagamu providing a comprehensive energy offering across pipeline gas, compressed natural gas (CNG) and liquefied natural gas (LNG). It also supplies gas to power utilities and industries across the West Africa region, taking advantage of its status as a designated shipper on the West African Gas Pipeline (WAGP), a regional gas pipeline spanning across Benin, Togo and Ghana.
Sojitz is a leading conglomerate whose experience spans several industries including energy (gas, LNG, renewables, power, new clean energies including hydrogen), automotive, aerospace, agriculture, chemicals, consumer goods, healthcare, infrastructure and resources. As a global energy player, Sojitz possesses deep expertise in the gas and power infrastructure sector, where it has been involved in the development of gas distribution networks, LNG terminals and power plants globally.
Under Sojitz’s “Medium-Term Management Plan 2023”, the company aims to adopt a market-oriented initiative in growth industries and in accordance with the plan, has developed a downstream gas business in Vietnam. This know-how will enhance the Axxela Group’s operation and growth and ultimately aim to provide multiple energy solutions meeting individual customer’s requirements while contributing to CO2 reduction.
West Africa’s abundant gas resources have for decades served the energy requirements of Europe and Asia via LNG exports, with modest growth in regional consumption due to the dearth of processing and distribution infrastructure to connect with market demand. Helios and Sojitz together believe that the actionable, economically viable and just energy transition pathway for Africa can be achieved through the accelerated build-out of gas infrastructure, which would enable the switch away from coal and liquid fuels, eliminate routine gas flaring and support the increased penetration of renewable energy by complementing its intermittent supply with reliable and flexible gas-fired power supply.
Ogbemi Ofuya, Partner at Helios Investment Partners, commented: “We feel privileged to enter into this partnership with Sojitz to drive further growth of Axxela’s business. This transaction demonstrates the value of our strategy to build market-leading, strategically important businesses which become highly sought-after by global investors seeking to enter Africa or grow their presence on the continent. Sojitz is a world-class energy infrastructure investor and their investment represents the first Japanese strategic investment in a downstream gas distribution business in Africa. We look forward to working together to accelerate energy access for industrial growth and decarbonisation across Africa.”
Masakazu Hashimoto, COO of Infrastructure & Healthcare Division at Sojitz Corporation, commented: “We are pleased to announce this strategic investment into the Axxela Group, which opens the door for our entry to a gas downstream market in Africa where huge growth potential is expected. Africa is the largest frontier in the 21st century. This transaction embodies our “market-oriented initiative” and “co-creation and sharing methodologies” and begins a partnership between the internationally reputable fund Helios and Sojitz. We expect that this collaboration will create additional value to Axxela and their stakeholders by way of a disciplined investment while ESG issues are fully addressed.”
Mr. Bolaji Osunsanya, CEO of Axxela Limited, commented: “We are delighted to welcome Sojitz to the Axxela family. This represents another first for us as an organisation, and a huge testament of continued investor confidence in our business. It also further affirms our position not only as a market leader, but as a reputable partner enabling industrialisation across Africa. With Sojitz onboard, our capacity is stronger, and we are better situated to attract the requisite capital to continue executing our development-oriented projects.’’
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