THE MERGERS & ACQUISITIONS REVIEW

M&A activity started picking up again in the first quarter of 2013 and this trend has continued in the first half of 2014. Most recent M&A activity in South Africa has been in the telecommunications, financial services, real estate, mining and resources, and hospitality and leisure sectors.

While there has been some inward investment into South Africa, M&A activity has been more pronounced between South African companies and by companies investing from South Africa into other African jurisdictions. Recent transactions involving foreign investors have included Marriott’s acquisition of the Protea Hotel Group and BNP Paribas’s acquisition of RCS Investment Holdings Ltd. There is also increasing interest shown by Japanese and Korean investors in all sectors.

There were again relatively few large black economic empowerment (BEE) deals, which for a number of years provided great impetus to the South African M&A market. The number of private equity exit transactions is set to increase as investment periods (usually five to seven years) come to an end. In addition, private equity acquisitions have started to increase in the rest of Africa, with many institutional investors viewing Africa as having more attractive returns than other emerging markets.

The signs point to steady activity in the M&A market and this is set to increase in the second half of 2014.

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