MARKETS

Kenya tops E.A in mergers and acquisitions with Sh142.8bn deals

Had 123 deals in 2022 out of the region's 162.

In Summary

•Total local mergers and acquisition deals sealed in Kenya during the period under review are valued at $1.1 billion (about 142.8 billion).

•The country took 76 per cent of the total deals signed in East Africa.

Thato Moloeleof Sanlam, Nindini Wilcke (Allianz), David Aggett (Sanlam), Iris Sibanda (Brunswick) and DealMakers Africa head Marylou Greig during the DealMakers Awards in Nairobi, on March 14/ HANDOUT
Thato Moloeleof Sanlam, Nindini Wilcke (Allianz), David Aggett (Sanlam), Iris Sibanda (Brunswick) and DealMakers Africa head Marylou Greig during the DealMakers Awards in Nairobi, on March 14/ HANDOUT

Kenya dominated mergers and acquisitions in East Africa last year, industry data show, with 123 out of the 162 deals signed in the region being by entities domiciled in the country.

Total local mergers and acquisition deals sealed in Kenya during the period under review are valued at $1.1 billion (about 142.8 billion).

This is however lower compared to the previous year's Sh165 billion, even as Kenya accounted for 76 per cent of the total deals signed in East Africa.

This was revealed on Tuesday night during the DealMakers Africa Awards held at a Nairobi hotel, where those entities and their advisory firms were honoured.

The firms were contracted either as financial advisers, legal advisers and tax advisers.

KCB Group’s acquisition of Trust Merchant Bank (TMB) was listed as the region’s deal of the year.

KCB  acquired 85 per cent stake in the DRC-based lender for a value estimated at more than Sh15 billion, giving it a foothold in the vast mineral-endowed central African country.

Head of DealMakers Africa, Marylou Greig, noted the acquisition is one of the region’s biggest deals to be executed in East and Central Africa over the past few years.

“It provides KCB with an opportunity to tap the immense trade opportunities that come with the DRC’s recent admission to the East Africa Community (EAC),” she said.

Deloitte, Bowmans, Stein Scop and Ernst & Young (EY offered advisory services to the transaction.

The acquisition of a 40 per cent stake in Naivas Supermarket by a consortium led by Mauritian conglomerate IBL Group and companies, including Proporco and French Fund worth Sh18.25 billion, was also recognised.

The amount represents almost three times the price paid by the minority shareholders just two years prior in 2020, when they acquired a 31 per cent stake.

The firms that advised on the purchase of a stake in Naivas were Rothchild & Co., Bowmans, Benoit Chambers, Kaplan & Stratton, PwC and EY.

Other deals in Kenya recognised include the disposal by HIL Holdings of Hillcrest International Schools to Braeburn Group, and Metro Group’s acquisition of a majority stake in Metropolitan Hospital Holdings.

Others were KITEA Group’s acquisition of a majority stake in Furniture Palace and the disposal of Golden Jubilee to Kasada Capital Management.

Overall, West Africa continued to dominate with the highest deal value of mergers and acquisitions at $3.29 billion (Sh427.2 billion), with Nigeria the centre of activity with 135 deals.

It was followed by East Africa, which recorded deal value in aggregate of $2.88 billion (Sh373.9 billion).

According to DealMakers Africa, there were a total of 687 local deals on the continent, excluding South Africa, valued at $1.75 trillion (Sh227.2 trillion).

This was however about 15 per cent lower than 2021’s deal value. 

DealMakers Africa tasked the advisory firms to nominate and submit notable mergers and acquisitions for two categories namely East Africa’s deal of the year, and East Africa’s private equity deal of the year.

Several factors were considered to determine the winner.

They include execution complexity of the deal, its size and the potential value creation.

The awards committee also named the combination of the African operations of Sanlam Group and Allianz in its Special Recognition Award of 2022.

It said that the transaction is expected to reshape Africa’s insurance industry, as it involved 27 countries and 12 overlapping countries.

Greig attributed the slowdown in activity witnessed, especially in the second half of the year, to macroeconomic factors such as the war in Ukraine, inflationary pressures, and rising interest rates.

She added that the factors are likely to keep activity subdued for now, impacting market sentiment, valuations and the cost of debt financing.

“On the bright side, it is important to note that the numbers are now back to their pre-covid levels,” she said.

DealMakers Awards were launched in 2000 in South Africa and were introduced to the rest of the continent in 2008.

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