KPMG prediction on mergers, acquisition plays out in local markets
...Nigeria, Ghana, Kenya key focus
Expert’s prediction about increased activity along mergers and acquisitions in most emerging market, which they said will determine growth and strength for big ticket risks, is coming to fruition with new regulations across countries.
Africa will be up on this with Nigeria, Ghana now in new recapitalisation demands from their insurance regulators, the National Insurance Commission of Nigeria, and the National Insurance Commission of Ghana.
Though, KPMG report in 2014 was of the view that this will be driven by need for synergy and stronger capacity for big ticket risks, most firms across the market may have this as last options to remain in business.
According to KPMG , though many companies will want to remain with brand identify, the need to for synergy and capacity to take up on big ticket risks remain key drivers.
At the beginning of 2014, KPMG Internationals Deal Advisory practice published a short report titled, Ten Predictions for Growth: Trends shaping the future Insurance M&A landscape.
The predictions focused primarily on the importance of high growth markets and the impact of technology, alternative buyers and
regulation.
As KPMG professionals supported clients throughout the year, it became evident that many of the predictions were unfolding as expected, with some surprises along the way.
A Year in Review: Drivers and trends that shaped Insurance M&A in 2014, published in December, provides a good overview of the deals and market conditions that influenced the landscape throughout the year. We do not expect to see a fundamental change in the nature or volume of deal activity in 2015, assuming there are no significant macro-economic shocks, says the KPMG report, at that time. But they however, anticipate subtle changes in focus and geographic areas of interest, it said.
According to the report, the world’s largest corporates are expected to show an increased appetite for M&A deals and will likely have more capacity to fund prospective transactions in the rest of 2015, and now beyond.
The pace of change in developing economies brings diverse challenges and opportunities. As companies look to take advantage of opportunities, where the newly elected government has eased the restrictions for investors, or in Africa, where countries such as Nigeria and Kenya are resizing their GDPS to show the true value of their markets, the doors are open for a variety of businesses to enter.
For Insurance, there are a number of important ways that high growth markets are expected to influence the M&A environment.
The African region, and in particular Sub Saharan Africa, is becoming increasingly important to the insurance community. While the markets are still relatively immature and unable to move the dial of a large corporation in the short-term, the longerterm prospects are significant. Emerging markets
The potential for Africa is supported by positive demographic change. The population is expected to double in size by 2050, a developing middle class (forecast GDP per capita growth of 28.6 percent between 2013 and 2019) and the adoption of technology, particularly leveraging mobile technology to grow financial services, present many opportunities. Excluding South Africa, insurance penetration remains close to just 1 percent of GDP. We saw a number of global insurers, as well as insurance groups from South Africa, look to capitalize on this underlying opportunity and complete deals in 2014, and this trend to continue, and indeed, increase in 2015 and beyond.