M&A activity in Africa was steady in 2015 despite facing numerous obstacles.
A steady increase in African deal flow and interest from overseas investors since the financial crisis points to the increasing maturity of African countries as a destination for M&A. Total African deal volume was buoyant at 290 deals, up 1% from 2014, despite severe headwinds from a slowdown in the Chinese economy and currency woes in South Africa and Nigeria, the continent’s two largest M&A markets. Accordingly, deal value fell by 26% to US$27.3bn in 2015, mostly due to a smaller number of big-ticket transactions on the continent. The mid-market was busiest, as dealmakers focused on smaller investments. Indeed, 88% of transactions were valued up to US$250m. By contrast, there were only five deals worth more than US$500m, compared to 14 in 2014. Nevertheless, deal volume for 2015 was the highest on record since 2007, as both corporates and private equity firms – armed with large cash reserves and access to cheap finance – continued to close in on opportunities, despite the wider uncertainty of globally depressed commodity prices. The rise in inbound investment into Africa, which accounted for 70% of deal value in 2015, proves the attractiveness of the market.