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Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$ 12 Billion in H1 2023

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2 months ago

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merger and acquisition

Refinitiv, an LSEG (London Stock Exchange Group) business, today released the H1 2023 investment banking analysis for the Sub-Saharan African. 

According to the report, an estimated US$293.4 million worth of investment banking fees were generated in Sub-Saharan Africa during the first six months of 2023, a 37% increase from the same period in 2022 and the highest first-half total since 2018.

INVESTMENT BANKING FEES

An estimated US$293.4 million worth of investment banking fees were generated in Sub-Saharan Africa during the first six months of 2023, a 37% increase from the same period in 2022 and the highest first-half total since 2018.

Equity capital markets underwriting fees totalled US$9.8 million, a 49% decline compared to year ago levels and the lowest first half total in the region since 2000, while debt capital markets underwriting fees declined 8% to a three year low of US$53.2 million.

Syndicated lending fees totalled US$160.6 million, more than three-times the value recorded last year at this time when fees fell to the lowest first half level since 2012. Advisory fees earned from completed M&A transactions in the region totalled US$69.8 million during the first six months of 2023, down 21% from 2022 levels and a two-year low.

Sixty-five percent of all Sub-Saharan African fees were generated in South Africa during the first half of 2023, followed by Nigeria (8%) and Angola (7%).  JP Morgan earned the most investment banking fees in the region during the first six months of 2023, a total of US$34.6 million or a 12% share of the total fee pool.

MERGERS & ACQUISITIONS

The value of announced M&A transactions with any Sub-Saharan African involvement reached US$12.0 billion during the first six months of 2023, a 51% decline compared to year ago levels and the lowest first half total since 2020.

The number of Sub-Saharan African deals declined 23% compared to a year ago, a ten-year low. Deals involving a Sub-Saharan African target totalled US$4.9 billion during the first half of 2023, down 77% from 2022 levels and a three-year low.

The number of deals declined 23% from last year.  Inbound deals involving a non-Sub-Saharan African acquiror declined 80% to US$3.6 billion, while domestic deals declined 58% to US$1.3 billion.  Sub-Saharan African outbound M&A totalled US$1.6 billion, up 30% compared to the value recorded during 2022 but lower than any other first-half total since 2009.

Israel is the most popular destination by value, driven by Fortune Bliss Ventures’ purchase of a stake in mobile game developer Playtika Holding Corp.  India is the most popular destination by number of deals. Energy & Power was the most targeted sector in Sub-Saharan African by value, while the highest number of deals was recorded in the technology sector.

South Africa was the most targeted nation, followed by Nigeria and Zimbabwe. JP Morgan topped the any Sub-Saharan African involvement announced M&A financial advisor league table during the first half of 2023.

EQUITY CAPITAL MARKETS

Sub-Saharan African equity and equity-related issuance totalled US$279.2 million during the first six months of 2023, a 68% decline compared to the same period in 2022 and the lowest first half total since 2021.

Just three new issues were recorded in the region, a low not seen since 1995. South African retail firm Pepkor Holdings and mining development company Premier African Minerals were the only companies in the region to raise new equity funds during the first half of 2023, through follow-on offerings.

No initial public offerings or convertible bonds were recorded. Morgan Stanley and Capitalmind Investec shared first place in the Sub-Saharan African ECM underwriting league table during the first half of 2023.

DEBT CAPITAL MARKETS

Overall Sub-Saharan African debt capital markets activity totalled US$5.9 billion during the first six months of 2023, down 67% compared to year ago levels and the weakest opening six-months for DCM activity in the region since 2013.

A total of 28 new offerings were brought to market during the first half of 2023, a 35% decline compared to a year ago and a four-year low. Ivory Coast was the most active issuer nation during the first half of 2023, accounting for 49% of total bond proceeds, followed by South Africa (38%).

Government & Agency issuers accounted for 49% of proceeds raised during first half of 2023, while Financials issuance accounts for 34%. JP Morgan took the top spot in the Sub-Saharan African bond underwriting league table during the first half of 2023, with US$1.1 billion of related proceeds, or a 19% market share.

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Loans

Nigerian Banks’ Borrowings from CBN Surge 835% in a Month, Raising Liquidity Concerns

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1 day ago

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September 23, 2023

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Global Banking - Investors King

The Nigerian banking sector has witnessed an unprecedented 835% surge in borrowings from the Central Bank of Nigeria (CBN) in the span of just one month, igniting concerns over the nation’s liquidity stability.

Data reveals that banks’ dependence on the CBN has reached new heights, with their borrowings skyrocketing from a relatively modest N323.97 billion in August to N3.03 trillion in September. This remarkable increase underscores a growing reliance on the CBN’s support in times of financial stress.

This surge in borrowing activity has primarily been attributed to the CBN’s stringent monetary policies aimed at curbing inflation and managing the demand for foreign exchange. These policies have, in turn, squeezed commercial banks, compelling them to tap into the CBN’s Standing Lending Facility (SLF) for immediate liquidity needs.

Despite the escalating dependence on CBN funds, the Monetary Policy Committee (MPC) of the apex bank insists that the Nigerian banking sector remains fundamentally robust. MPC member Adenikinju Festus highlighted key indicators, including Capital Adequacy Ratio (CAR) and Non-Performing Loan (NPL) ratios, which still align with prudential standards. Furthermore, liquidity ratios have improved, and returns on equity and assets have risen.

However, the banking industry’s persistently high operating costs are raising alarms. In comparison to international standards, Nigerian banks are grappling with substantially higher operating expenses, prompting concerns about their long-term sustainability.

In a parallel development, the CBN’s Development Finance Department has disbursed a total of N9.714 trillion to various sectors of the economy over the past three years, with manufacturing and industries receiving the largest share at 32.6%.

Other sectors, including energy, agriculture, services, micro, small, and medium enterprises (MSMEs), export, and health, have also benefited significantly from these disbursements.

While the CBN remains committed to fostering sustainable economic growth, the surging dependence of Nigerian banks on short-term borrowings from the central bank is casting shadows on the sector’s long-term stability.

As Nigeria grapples with these liquidity concerns, the financial industry and regulators face the challenging task of charting a course towards a more resilient and sustainable banking environment.

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Banking Sector

Central Bank of Nigeria Postpones 293rd Monetary Policy Committee Meeting

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2 days ago

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September 22, 2023

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Central Bank of Nigeria - Investors King

The Central Bank of Nigeria (CBN) has announced the postponement of its 293rd Monetary Policy Committee (MPC) meeting, originally scheduled for September 25th and 26th, 2023.

Dr. Isa AbdulMumin, the bank’s Director of Corporate Communications, released a statement on Thursday confirming the decision.

In the statement, Dr. AbdulMumin stated, “The Monetary Policy Committee of the Central Bank of Nigeria has deferred its 293rd meeting, which was initially planned for Monday and Tuesday, September 25th and 26th, 2023, respectively. A new date will be communicated in due course. We regret any inconvenience this change may cause our stakeholders and the general public.”

While the CBN did not provide an official reason for the postponement, some industry experts suggest it may be related to the pending approvals for the newly appointed governor and deputy governors of the bank.

President Bola Tinubu recently nominated Yemi Cardoso as the potential head of the CBN. Additionally, Tinubu has endorsed the nominations of four new deputy governors for the apex bank, who are expected to serve for an initial term of five years, pending confirmation by the Senate.

The nominated deputy governors are Emem Usoro, Muhammad Abdullahi-Dattijo, Philip Ikeazor, and Bala Bello. However, the appointment of the CBN governor is contingent upon Senate confirmation, which is currently on a yearly recess.

The CBN assures stakeholders and the public that the rescheduled MPC meeting date will be communicated promptly as soon as it is confirmed.

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Banking Sector

Currency in Circulation Surges by N1.7 Trillion Amidst Rising Cash Transactions

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2 days ago

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September 22, 2023

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New Naira Notes

The currency in circulation in Nigeria has surged by N1.7 trillion, driven by a surge in cash transactions.

According to data obtained from the Central Bank of Nigeria (CBN), as of the end of August, the currency in circulation rose to N2.7 trillion.

This substantial increase in currency in circulation comes after a 235.03 percent dip to N982.1 billion as of the end of February 2023 from N3.29 trillion at the close of October 2022, primarily due to the naira redesign policy spearheaded by the CBN.

However, the currency in circulation began its steady ascent once the policy concluded. Cash that had been previously withdrawn from circulation to promote electronic payments was reintroduced into the economy, contributing to this significant boost.

The data obtained from the CBN reveals that a whopping N2.3 trillion was removed from circulation during this period.

The CBN defines currency in circulation as all legal tender currency in the hands of the general public and within the vaults of Deposit Money Banks, excluding the central bank’s vaults.

The CBN further elucidated its methodology, stating that it employed an “accounting/statistical/withdrawals & deposits approach” to calculate the currency in circulation in Nigeria. This approach meticulously tracks the movement of currency in circulation on a transaction-by-transaction basis.

Under this methodology, each withdrawal made by a Deposit Money Bank at one of CBN’s branches results in an increase in currency in circulation (CIC), while each deposit made by a DMB at one of CBN’s branches leads to a decrease in CIC.

This surge in currency in circulation reflects the evolving landscape of financial transactions in Nigeria and underscores the importance of flexible monetary policies in facilitating economic growth and stability.

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