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Mergers & Acquisitions Equity Capital Markets Recent Transactions

2 October 2015
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This would supplement an already healthy stand-alone interest in African investment, with certain jurisdictions obviously being more attractive and open to investment than others. Risk and reward profiles vary widely – in some countries, getting deals done  is very hard.

We anticipate an uptick in interest in the continent from the private equity sector in 2015. Amongst other things, disappointing growth in other emerging markets has helped to retain interest and maintain activity in higher growth countries across Africa, as well as lower growth countries in which it is easier to get deals done. In this regard, the International Monetary Fund has forecast that Africa will be the second fastest-growing region in 2015, expanding 5.75 per cent, behind the developing Asia region that includes India and China.

Based on, amongst other things, recent M&A transactions that have been announced, the developmental stage of many countries on the continent, urbanisation and growing middle classes, it is anticipated that deal activity in 2015 will be experienced across  a wide range of sectors including retail and consumer goods, pharmaceuticals, agriculture, education, telecommunications and financial services. Oil and gas also presents opportunities as regulatory regimes in certain countries get bedded down or stream-lined: developments in this regard in South Africa have  recently been announced in the media. Clearly, however, the price of oil is critical to developments in this sector.

The geographical source of foreign direct investment (FDI) also appears to be expanding. We are seeing  lively FDI interest in Africa from North America, China, Western Europe, Japan and India to name a few, even when compared to levels of interest 18-24 months ago. Our sense is that the United States, for one, has become more prepared to accept the risks and pursue the prospects that Africa presents and we expect to see more deals, or at least interest, emanating from the region going forward.

From a South African perspective, cross border opportunities have helped to buttress domestic activity and keep M&A buoyant, despite a slowing domestic economy and energy concerns. It has become well established that South African deals are, in many instances, driven by investors who would like to establish launching pads for broader African investment. South Africa does not, however, enjoy exclusive African gateway status. Other African cities are also gaining  or improving their position in this regard. Nairobi, where we have a significant office with more than 100 people, is a notable example in respect of the East Africa region. Lagos obviously remains key to Nigerian access but, in our view, is yet to be seen as a broader West African gateway.

Our Bowman Gilfillan Africa Group (BGAG) advises clients throughout Africa from our integrated offices in Botswana, Kenya, Madagascar (for coverage of francophone OHADA jurisdictions across the continent), South Africa, Tanzania and Uganda. We also have best friends in Nigeria and close connections in a number of other jurisdictions. This gives us the means to co-ordinate cross-border deals in the African countries that are attracting the most investor interest at present.

We are looking forward to a vibrant year helping our clients find innovative transactional solutions and achieve prosperity across the continent.