Investors look offshore
The much-anticipated consolidations in the mining and telecommunications sectors;
The strengthening of the relationship between China and SA (following the Summit of the Forum on ChinaAfrica Co-operation in Johannesburg in December), which ought to result in further inbound mergers and acquisitions activity from China and Hong Kong into our region; and
The increased involvement of Indian corporates in business on the African continent.
“Other sectors where we expect some mergers and acquisitions activity during 2016 are agribusiness, renewable energy and food and beverages,” Mr Pretorius said.
“Additionally, the size of the proposed AB Inbev/SAB Miller merger and the resultant restructures, reorganisations and disposals which may result from this transaction should be taken into account in any assessment of the anticipated transactional activity for this year.”
Willem Jacobs, national practice head of the corporate and commercial practice at Cliffe Dekker Hofmeyr, says SA’s slow economy is forcing companies to look at offshore expansion to achieve higher levels of growth.
Deepa Vallabh, head of cross-border mergers and acquisitions, Africa and Asia, at Cliffe Dekker Hofmeyr, agrees: “Significant opportunities exist in 2016 for investment into Africa, as continued urbanisation and growth in populations will drive demand in consumer sectors, particularly in real estate, food and healthcare. Challenges in terms of finding the balance between investor aspirations and political and policy considerations will form key considerations in terms of structuring investments into the continent.”
We have noted before in this publication that the expansion of major law firms into Africa is going to be a major trend to watch. This trend continues to gather pace, with the movement among firms remaining highly competitive.
In December ENSafrica announced the launch of ENSafrica Ghana and from December 1 joined forces with Ghanaian firm Oxford & Beaumont Solicitors.
According to ENSafrica, Ghana is one of the continent’s fastest-growing economies and is considered a gateway to the West African region. It says Ghana offers a wide range of business and investment opportunities and the country has an abundance of agricultural, mining and human resources, among others.
Some of the major international firms that are expanding in Africa, such as Linklaters and Freehills, are looking to increase their slice of the deal flow this year.
Other big firms such as Hogan Lovells and Baker & McKenzie also want to break into the Africa top-deal tables. It is indicative of the race for energy, mining and consumer-based expansion opportunities that continue across the continent.
Added to the significant rise in deal value, it all bodes well for a healthy 2016 in terms of deal flow, which will hopefully prevent SA from falling into recession.