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Sub-Saharan Africa Mergers and Acquisition Transactions Totalled US$39.6 Billion in the First Nine Months of 2022

An estimated US$327.5 million worth of investment banking fees were generated in Sub-Saharan Africa during the first nine months of 2022

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Refinitiv, a London Stock Exchange Group business, today released the investment banking analysis for the Sub-Saharan African for the third quarter of 2022. 

Investment Banking Fees

An estimated US$327.5 million worth of investment banking fees were generated in Sub Saharan Africa during the first nine months of 2022, 21% less than the same period in 2021 and the lowest first nine-month total in the region since 2013.  Fees totalled US$112.9 million during the third quarter of 2022, an increase of 46% from the previous quarter.

Advisory fees earned from completed M&A transactions in the region reached US120.8 million, a 64% increase from the first nine months of last year and a three-year high.  Equity capital markets underwriting fees declined 39% to US$30.8 million, the lowest first nine-month total since 2003, while debt capital markets fees declined 50% to US$59.3 million.  Syndicated lending fees declined 33% to US$116.6 million, the lowest first nine-month total since 2014.

Seventy-two percent of all Sub-Saharan African fees were generated in South Africa during the first nine months of 2022, followed by Mauritius (10%) and Nigeria (5%). Citi earned the most investment banking fees in the region during the first nine months of 2022, a total of US$26.7 million or an 8% share of the total fee pool.

Mergers & Acquisitions

The value of announced M&A transactions with any Sub-Saharan African involvement reached US$39.6 billion during the first nine months of 2022, 50% less than the value recorded during the same period in 2021.  Despite the decline in value, the number of deal announcements in the region increased 6% from last year to the highest first nine-month total since 2017.

Deals involving a Sub-Saharan African target totalled US$24.4 billion during the first nine months of 2022, down 61% from the same period last year but higher than the level recorded during each of the previous seven years.  Domestic deals declined 82% from last year’s record high value to US$9.3 billion, while inbound deals increased 47% to US$15.1 billion as the number of transactions increased 11% to an all-time high of 243. Sub-Saharan African outbound M&A totalled US$11.1 billion, down 1% from last year but the second highest first nine-month total since our records began in 1980.

The Energy & Power sector was most active, with deals targeting energy & power companies accounting for 39% of Sub-Saharan African target M&A during the first nine months of 2022, followed by Healthcare with 20%. South Africa was the most targeted nation, followed by Angola and Nigeria. Scotiabank topped the any Sub-Saharan African involvement announced M&A financial advisor league table during the first nine months of 2022.

Equity Capital Markets

Sub-Saharan African equity and equity-related issuance totalled US$993.2 million during the first nine months of 2022, the lowest first nine-month total since 2003.  Proceeds raised by companies in the region declined 15% compared to the first nine months of 2021, while the number of issues fell 18%.

All proceeds were raised by follow-on issuance with Pepkor Holdings, MTN Nigeria Communications and South African coal exporter ThungelaResources among those in the region raising new equity funds from follow-ons.  No convertible or initial public offerings were recorded in Sub-Saharan Africa during the first nine months of 2022.

Issuers in South Africa raised more in the equity capital markets than any other Sub-Saharan African nation during the first nine months of 2022, a total of US$716.1 million, while Nigerian issuers raised a combined US$277.1 million. Citi took first place in the Sub-Saharan African ECM underwriting league table during the first nine months of 2022 with a 37% market share.

Debt Capital Markets

Sub-Saharan African debt issuance totalled US$21.6 billion during the first nine months of 2022, down 43% from the value recorded during the same period in 2021.  The number of issues declined 40% from last year at this time. US$4.2 billion was raised during the third quarter of 2022, down 35% from the previous quarter and the lowest quarterly total in two years.

South Africa was the most active issuer nation during the first nine months of 2022, accounting for 47% of total bond proceeds, followed by Ivory Coast (27%) and Nigeria (10%). Government & agency issuers account for 62% of proceeds raised during the first nine months of 2022, while issuers in the technology sector account for 24%. Citi took the top spot in the Sub-Saharan African bond bookrunner ranking during the first nine months of 2022, with US$3.1 billion of related proceeds, or a 14% market share.

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

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Finance

Remittance to Nigeria, Other African Countries Hits $53bn in 2022

Remittance to Sub-Sahara Africa rose to $53 billion in this year

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The World Bank report has indicated that remittance to Nigeria and other countries in Sub-Sahara Africa has reached $53 billion in 2022. This represents an increase of 5.2 percent when compared with 2021.

Investors King understands that remittances into Nigeria and Kenya constitute a significant percentage of all the remittances into the African Sub-Sahara region. 

“Remittances to Sub-Saharan Africa, the region most highly exposed to the effects of the global crisis, grew an estimated 5.2 percent to $53 billion in 2022, compared with 16.4 percent last year (due mainly to strong flows to Nigeria and Kenya),” the report stated.

According to the World Bank report on Migration and Development, prepared by the bank’s Migration and Remittances Unit and Development Economy, remittance has constituted an important part of the Gross Domestic Product (GDP) for a number of African countries. 

For example, Remittances as a share of GDP in the Gambia is 28 percent while it stood at 21 percent in Lesotho, the report noted. 

The report added that remittances are an important source of household income for most Low and Middle-Income Countries (LMICs). Through remittances, most of the households in the LMICSs have been able to survive harsh economic conditions such as the Covid-19 pandemic. 

“Remittances are a vital source of household income for LMICs. They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrollment rates for children in disadvantaged households”. 

The World Bank noted that although the rising price of goods has adversely affected migrant incomes, the reopening of the economy and international borders has led to the increase of remittance inflow into Sub Sahara Africa.

Meanwhile, the global bank acknowledges that countries that witnessed scarcity of foreign exchange rates or multiple exchange rates officially recorded a decline in remittances inflow as migrants shift to alternative channels which promise better rates. 

The report noted that sending funds back home from some countries in Europe and America could attract a transaction fee that is as high as 7.8 percent on average. 

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Banking Sector

Insider Dealing: Hafiz Mohammed Bashir Acquires 37 Million Shares in Unity Bank

Alhaji Bashir carried out the acquisition in 32 different transactions at an average price of N0.51 a unit between November 8th and 11th 2022

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The management of Unity Bank Plc has announced that a non-Executive Director, Hafiz Mohammed Bashir scooped 37,681,947 shares of the bank.

The transaction was disclosed in a statement signed by the bank’s secretary, Alaba Williams.

Alhaji Bashir carried out the acquisition in 32 different transactions at an average price of N0.51 a unit between November 8th and 11th 2022, according to the disclosure available on the Nigerian Exchange Limited (NGX).

Insider dealing is the buying or selling of a company’s shares by someone with a piece of insider information not available to the public. Insider dealing is illegal in the U.S. but not in Nigeria as long as it’s disclosed.

The Nigerian Security and Exchange Commission (SEC) mandated all listed companies to disclose insider trading to enforce transparency across the nation’s Exchange market.

Also, insider dealings can help stakeholders and retail investors assess the confidence of top company executives in a listed company. While Alhaji Bashir’s acquisition could demonstrate his trust in the future of the company, it could also mean positioning ahead of a major company’s event given his position.

Hafiz Mohammed Bashir Profile

In 2017, Hafiz Mohammed Bashir was appointed as a Non-executive Director following the Central Bank of Nigeria’s approval.

Hafiz Mohammed Bashir is an accomplished professional with vast experience in the public and private sectors. He retired at the apex of Local Government Administration in Katsina State in 1992 and has chaired the Board of many companies – including Fiztom International Ltd, HafadGlobal Resources limited and Fiziks Nigeria limited.

Alh. Hafiz who is currently in private business holds a Post Graduate Diploma in Management from Abubakar Tafawa BalewaUniversity, Bauchi, and an Advance Diploma in Public Administration from the University of Jos, a higher Diploma in Local Government Administration- AhmaduBello University. Zaria and Diploma in Insurance from ABU, Zaria He is also currently undergoing a Master’s programme in Business   Administration at the Business School of the Netherlands.

See the details of the transactions below.

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Loans

Lagos Chamber of Commerce Advised FG on Borrowing, Proffer Solutions to Foreign Exchange Crises

LCCI lamented that additional borrowings will further increase Nigeria’s debt-servicing bill

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The Lagos Chamber of Commerce and Industry ( LCCI) has advised the Federal Government to explore alternative ways to finance the deficit in the 2023 budget proposal. LCCI lamented that additional borrowings will further increase Nigeria’s debt-servicing bill.

Investors King understands that the 2023 budget proposal as submitted to the National Assembly by the president has a deficit of N10.78 trillion.

Speaking at the organisation’s 134th Annual General Meeting (AGM) held in Lagos, LCCI President, Dr Olawale Cole, stated that although the chamber does not totally frown at the budget deficits, the chamber, however, is not disposed to issuing new commercial loans as well as bilateral and multilateral loans to finance the deficit. 

Dr. Olawale added that while President Buhari alongside other African presidents is seeking debt cancelation from international creditors, the presidents across the African continent keep piling up debts. 

“The world is a bit confused at our president’s well-publicized call for debt cancellation at the last United Nations General Assembly,” he noted.

Speaking further on the danger of the country’s incessant borrowing, Olawale said “the borrowings are significantly increasing, and Nigeria is struggling to service these debts due to revenue mobilisation challenges and an increased fuel subsidy burden”.

“The International Monetary Fund (IMF) has warned that debt servicing may gulp 100 percent of the federal government’s revenue by 2026 if the government fails to implement adequate measures to improve revenue generation,” he lamented. 

Similarly, the LCCI president also spoke on the foreign exchange challenges in Nigeria. He noted that the major cause of the fall in naira is a result of the drop in oil output and weak production amid increased demand for foreign currency. 

“The real solution to our forex scarcity crises is to boost production and expand exports. We must also resolve the crises around oil production, as 80 percent of forex earnings come from oil and gas exports,” he said. 

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