SSA investment banks earn $97.3mn from mergers and acquisitions

28Apr 2022
The Guardian Reporter
Dar es Salaam
The Guardian
SSA investment banks earn $97.3mn from mergers and acquisitions

INVESTMENT banks in Sub-Saharan Africa pocketed a tune of $97.3 million as fees during the first quarter of this year, the lowest in eight years, down 9 percent from the same period in 2021.

According to the regional 2022 investment banking analysis report by Refinitiv, the value of announced M&A transactions with any Sub-Saharan African involvement reached $7.0 billion during the first three months of 2022.

However, the amount was 13 percent less than the value recorded during the same period in 2021, despite an 11 percent increase in the number of deals.

Sub-Saharan African equity and equity-related issuance amounted $496.9 million during the first quarter of 2022, compared to just $18.4 million during the same period last year.

Regional debt issuance totalled $9.4 billion during the first quarter of 2022, down 30 percent from the value recorded during the same period in 2021, although historically high with only 2018 and 2021 registering higher first quarter totals.

Equity capital markets underwriting fees declined 1 percent to $8.8 million, the lowest first quarter total in twelve years. 

Debt capital markets fees declined 16 percent from last year’s record start to $40.7 million, while syndicated lending fees declined 81 percent to $6.3 million. 

Advisory fees earned in the region from completed M&A transactions reached a three-year high of $41.4 million, an increase of 163 percent compared to the first three months of 2021. 

Seventy-nine percent of all Sub-Saharan African fees were generated in South Africa during the first quarter of 2022, and 33 percent were earned from deals in the High Technology sector.

Goldman Sachs earned the most investment banking fees in the region during the first quarter of 2022, a total of $11.4 million or an 11.7 percent share of the total fee pool.

Deals worth $5.2 billion involved a Sub-Saharan African target, a 10 percent increase from the first quarter of 2021. 

While domestic deals declined 17 percent from last year, inbound deals involving a non-Sub-Saharan African acquiror increased 44percent to $3.0 billion, the highest first quarter total in five years. 

Meanwhile, Sub-Saharan African outbound M&A totalled $776.0 million, less than half the value recorded during the same period last year and with a 15 percent decline in the number of deals.

High technology was the most targeted sector by value in Sub-Saharan Africa during the first quarter of 2022, while the financial sector saw the highest number of deals in the region.

South Africa was the most targeted nation, with $2.5 billion in M&A announcements, equivalent to 48percent of total activity recorded in the region.

With advisory work on deals worth a combined $1.8 billion, Goldman Sachs held the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during Q1 2022.

All proceeds were raised by follow-on issuance with MTN Nigeria Communications and South African coal exporter Thungela Resources among those in the region raising new equity funds from follow-ons. 

No convertible or initial public offerings were recorded in the region. 

Issuers in Nigeria raised more in the equity capital markets than any other Sub-Saharan African nation during the first quarter of 2022, a total of $277.1 million, while South African issuers raised a combined $219.9 million.

Morgan Stanley took first place in the Sub-Saharan African ECM underwriting league table during the first quarter of 2022 with a 23 percent market share, followed Java Capital with 13 percent.

The number of issues declined 43 percent from last year at this time.  South African was the most active issuer nation during the first quarter of 2022, accounting for 59 percent of total bond proceeds, followed by Nigeria (22 percent) and Ivory Coast (14 percent). 

Issuers in the technology sector accounted for 56 percent of proceeds raised during the first three months of 2022, while government & agency issuers accounted for 27 percent.

Citi took the top spot in the Sub-Saharan African bond book-runner ranking during the first quarter of 2022, with $1.7 billion of related proceeds, or an 18.1 percent market share.