During the first nine months of 2014, fees for sub-Saharan African Investment Banking services totalled US$118.6m according to estimates from Thomson Reuters/Freeman Consulting, a 30 percent increase from the previous quarter and the highest quarterly fee total since the first quarter of 2011.
In respect to the Mergers and Acquisitions (M&A) activity, the value of announced M&A transactions involving Sub Saharan African targets reached US$12.3bn during first nine months of 2014, down 47 percent from the same period last year and the lowest first nine month total in the region since 2004.
Keith Nichols, managing director, Africa, Thomson Reuters, said: “Equity and equity-linked issuance in Sub Saharan Africa totalled US$6.4bn during the first nine months of 2014, more than three-times the value recorded during the same period last year and the highest first nine month total since our records began in the 1970s.”
He added: “Sub-Saharan African debt issuance reached US$15.1bn during the first nine months of 2014, an increase of 53 percent compared to the same period last year, and the highest first nine month total since our records began.”
Despite the strong third quarter, investment banking fees recorded in the region during the first nine months of 2014 trailed 2 percent behind the same period last year, at US$252.6m. Fees from equity capital markets underwriting doubled from this time last year to reach US$104.6m, marking the highest first nine month total in the region since 2007.
Fees from advisory on completed M&A transactions also increased from the first nine months of 2013, growing 13 percent to US$61.9m. Debt capital markets underwriting fees totalled US$36.5m, 29 percent less than the same period last year, while syndicated lending fees fell 49 percent to US$49.6m. Citi topped the Sub Saharan African fee league table during the first nine months of 2014 with a 12 percent cut of the fees. Standard Bank Group and Barclays followed in second and third positions, respectively.
Speaking about the M&A activity, Nichols said: “The most targeted nation by value so far this year was South Africa, accounting for 53 percent of activity, followed by Angola (7.7 percent) and Mauritius (7.5 percent). The United Kingdom was the most active foreign buyer in the region. The largest deal in the region during the third quarter of 2014 was Exxaro Resources’ US$472m offer for coal mining company Total Coal South Africa.”
“Theme International Holdings’ US$1bn offer for oil field exploration and production company Everest Hill Energy Group is the largest deal to be announced in the region so far this year. Boosted by these two deals, Energy & Power was the most active sector, accounting for 26 percent of M&A activity. Standard Bank topped the 3Q 2014 announced any sub-Saharan African involvement M&A Ranking, with US$3.1bn,” he added.
Nichols commented on the ECM activity during the first nine months of 2014. He pointed out that proceeds raised from follow-on offerings accounted for 70 percent of ECM activity, while initial public offerings and equity-linked issuance accounted for 17 percent and 13 percent, respectively.
84 percent of deals involved a South African issuer.
“The financial sector was the most active sector for equity issuance in the region, followed by retail. The largest deal so far this year was an US$890m follow-on issue from food and clothing retailer Woolworths, in September.
The largest IPO so far this year was oil company Seplat Ltd’s US$541m dual listing on the London and Nigerian Stock Exchanges in April. Citi took the top spot in the Sub Saharan African Equity Capital Markets league table during the first nine months of 2014, with 16 percent of the market,” he noted.
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Speaking about debt capital markets in Sub Saharan African, Nichols pointed out that the Kenyan government raised US$2.0bn in June, the largest bond issued in the region so far this year. Barclays took the top spot in the Sub Saharan African Debt ranking for the first nine months of 2014 with US$2.2bn, or a 15 percent share. Citi and Deutsche Bank followed in second and third positions.
