Naspers changes complexion of M&A

NASPERS’ spin-off of its pay TV unit MultiChoice changed the complexion of mergers and acquisitions (M&A) in the first quarter of 2019, helping to turn around a 12 percent decline to a 71 percent increase, financial analysis think-tank Refinitiv said in its sub-Saharan Africa Investment Banking Review for the period.

Refinitiv, formerly Thomson Reuters’ Financial and Risk business, which is one of the world’s largest providers of financial markets data, said deals involving a sub-Saharan African target increased 71 percent in value to $6 billion (R84.90bn), driven by Naspers’ $5.1bn spin-off of MultiChoice.

South Africa’s overseas acquisitions accounted for 57 percent of sub-Saharan African outbound M&A activity, while acquisitions by companies with headquarters in Mauritius accounted for 43 percent.

But an analyst, who declined to be named, said the Naspers merger was a once-off transaction, which did not establish a trend, and that sentiment was still subdued mainly because of uncertainty and perceived risks in emerging markets.

“The Federal Reserve policy of a tighter monetary policy and a contraction in global liquidity were also factors impacting on the slowdown in the M&A activities in sub-Saharan Africa. Naspers was an inevitable deal if you like, but there are not likely to be anymore on that scale,” he said.

Refinitiv said fees from completed M&A transactions totalled $36.9 million, a 31 percent increase year-on-year though this was in contrast with an earlier report for 2018, which indicated that a 12 percent decline in M&A in the value of announced M&A transactions with any sub-Saharan African involvement in 2018.

Completed M&A fees accounted for 39 percent of the overall sub-Saharan African investment banking fee pool during the first quarter of 2019.

The report noted that sub-Saharan African investment banking fees reached an estimated $93.5m during the first quarter of 2019, 24 percent less than the value recorded during the same period in 2018 and the lowest first quarter total in five years.

Citi earned the most investment banking fees in sub-Saharan Africa during the first quarter of 2019, a total of $16.5m, or a 17.6 percent share of the total fee pool.

Standard Bank Group topped the Sub-Saharan African Equity Capital Markets league table during the first quarter of 2019 with a 49 percent share of the market.

Sub-Saharan African equity and equity-related issuance totalled $1.1bn during the first quarter of 2019, 61 percent less than the value recorded during the first three months of 2018. Eight follow-on offerings totalled $1bn and accounted for 98 percent of total equity capital market (ECM) activity in the region by value, while a single initial public offering accounted for the remaining 2 percent.

Icon Properties was the only initial public offering in the region during the first quarter of 2019, raising $20.4m on the Malawi Stock Exchange in January. Standard Bank Group topped the sub-Saharan African ECM league table during the first quarter of 2019 with a 49 percent share of the market.

JP Morgan took the top spot in the sub-Saharan African bond ranking during the first quarter of 2019 with $944.4m of related proceeds, or a 16 percent market share.