By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE) – Value of merger and acquisitions (M&A) targeting sub-Saharan African firms has risen 12 percent so far this year to $23.4 billion, according to a Reuters report on Sunday.
Reuters says African companies are attracting increasing investor attention due to the spending power of the rising middle class and expansion of the continent’s natural resources sector.
It further affirmed that equity and equity-linked issuance dropped 16 percent from the same time a year ago, to $5.4 billion. “But investment banking fees for sub-Saharan African investment banking services inched up 4 percent to $306 million,” Reuters added.
The report disclosed that Rand Merchant Bank, an investment banking unit of South Africa’s FirstRand, earned the most investment banking fees during the period with $38.7 million, or a 12.6 percent share of the total fee pool.
In the same vein, the report disclosed that debt issuance in sub-Saharan Africa dipped by nearly a third to $10.3 billion in the nine months period of 2015.
Thomson Reuters said the trend is coming on the heels of sinking currencies and faltering economies which forced borrowers to take a break.
The report says taking advantage of historically low yields and strong investor appetite; Africans have borrowed heavily in international markets in recent years with debt sales reaching record highs in 2014.
Reuters noted with the prospect of a hike in U.S. interest rates, slowing economies at home and a gloomy outlook for commodity prices, African states and companies have been more reluctant to tap capital markets this year.
Also, the Thomson Reuters’ quarterly investment banking analysis disclosed that South Africa was the biggest issuing country, accounting for almost half of the activity, followed by the Ivory Coast with 25 percent.
