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Nigeria will achieve a Mergers and Acquisitions (M&A) activity in both domestic and Cross-Border value of $3.9 billion (N1.4 trillion) this year, in 35 deals, a 231 percent increase from last year $1.2 billion, according to Baker McKenzie’s Global Transaction Forecast.
Consumer goods and finance industries is expected to lead in the value of these deals, while pharmaceuticals, healthcare, technology and telecommunication sectors is expected to lead on volumes growing by four times than it did in 2017
Why this looks like a huge growth, the value is just a slice of total global expectation of US$3.2 trillion in 2018 and also lower to other Africa countries.
South Africa is expected to witness 295 M & A activity worth $8.4 billion and Egypt 59 valued at $5.4 billion both in domestic and cross border transactions.
Regionally, this is a huge improvement from the continent total M&A values in 2016, which fell to US$37 billion a 40 percent drop from US$61 billion in 2015 and also dropping further to US$29 billion in 2017.
However, the total value of these deals shows Africa is still a long way in catching up with its peers as it fell below M&A value of US$134 billion expected in Latin America another developing of continent.
The Global Transaction figures which received a quantitative analysis from Oxford Economics, also predicted that Nigeria will received a further Initial Public Offer(IPO) issuance worth $185 million in 2018 out of the US$7 billion expected in Africa by 2019.
Technology and telecom activity was identified in the report to help further add to Nigeria attract IPO activity in 2019 valued at $407 million in 2019, and $162 million in 2020.
Again, the report said, South Africa and Egypt is expected to lead on the value of IPOs investment this year at $807 million and $507 million respectively.
The report also revealed that the total global M&A will rise to a peak of US$3.2 trillion in 2018, up from US$2.6 trillion in 2017 but far short of the US$4 trillion peak before the global economic crisis and 2020 also looks gloomy as it is predicted to witness a $ 3.9 billion decrease.
In a recent report by global consulting firm, Price Waterhouse Coopers(PWC), it was revealed that the Nigerian Stock Exchange did not record a single IPO activity since 2015, with investors looking into Southern, Eastern and North African countries.
Recently, BusinessDay reported that plans are already on the way by MTN group to push through the highly expected initial public offering (IPO) in June for its Nigerian unit if all necessary approvals is given by the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE).
Explaining how the report came about its outlook for the continent, Darryl Bernstein, South Africa’s head of the technology, media and telecommunications practice at Baker McKenzie noted that “Africa’s growing telecoms infrastructure and access to online services and platforms continue to improve access to the online economy. Increased local demand for innovative products, services and solutions drives offshore telecommunications and technology companies to target opportunities in Africa.”
Going further she stated that, “the growing financial services sector has also seen domestic banks make significant investments in technology to advance their innovation agenda. African technology companies are also targeting offshore investments in companies that will deepen their access to new technologies, markets and talent.”
Adding that, “The expansion of emerging technologies across industries, including agribusiness, automotive and of course fintech, will also drive M&A activity as we expect to see more cross-sector deals involving technology.”
“Global dealmakers are regaining their appetite for investment amid the easing of key economic and political risks and the emergence of positive macroeconomic deal drivers. As a result, we expect global deal activity to accelerate into 2018.”
DAVID IBEMERE
