Kenya beats regional peers as most active mergers market

Kenya had the second highest corporate actions in Africa outside South Africa in 2022 in terms of the value of mergers and acquisitions (M&A), a new study has shown.

The survey commissioned by DealMakers Africa, a leading M&A rankings provider, shows Kenya was second to Nigeria in Africa measured by value of deals as South Africa was not included in the survey.

NCBA bank’s merger alongside I&M’s deal with Burbidge Capital were among the drivers of activities in Kenya.

Kenya’s total deals were worth over Sh500 billion compared to Nigeria’s over Sh800 billion while Egypt and Malawi topped Sh300 billion worth of deals. KCB Group’s acquisition of Trust Merchant Bank in DRC emerged as the region’s deal of the year during East Africa’s notable company mergers and acquisitions recognition ceremony in Nairobi.

Commenting on the win, Marylou Greig, the head of DealMakers Africa said the acquisition is one of the region’s biggest deals to be executed in East and Central Africa over the past few years.

Trade opportunities

“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.

Companies that offered advisory services to the acquisition of TMB were Deloitte, Bowmans, Stein Scop and Ernst & Young (EY).

To determine the winner, DealMakers Africa considered various factors which included the execution complexity of the deal, its size and the potential value creation.

Early in 2022, Morrocco-based Furniture group KITEA and Tana Africa Capital acquired 55.9 per cent of Kenya based Furniture Palace.

“The acquisition marks KITEA’s entry into the East African market, a move that speaks to its strategy of building a pan Africa brand,” said Deal Makers.

DealMakers Africa evolved from South Africa’s DealMakers, which was launched in 2000 and has become the leading M&A Rankings provider in South Africa. One other major deal in Kenya was the acquisition of a stake of Crown Plaza by private equity group Kasada Management.

“The acquisition of Kenyan Crown Plaza by Kasada Management from Kenyan businessman Nazir Ahmed Akbarali is the second acquisition in East Africa by the private equity fund dedicated to the hospitality sector,” said the survey.

DealMakers Africa named Naivas’ stake exit, the region’s Private Equity Deal of the Year. Greig said the exit from Naivas by a host of investors, including the Gakiwawa family, was the most notable in the category, due to the magnitude of the deal.

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

Commenting on the increase in merger and acquisition activity in Africa, Deal makers Africa CEO, Michael Smith, said they are seeing a lot of interest from international investors in the African market, particularly in sectors such as telecommunications, financial services, and energy.

“The Covid-19 pandemic has presented challenges, but it has also created opportunities for companies to expand and grow through strategic mergers and acquisitions,” he said.

In 2022, Africa saw a significant increase in merger and acquisition activity, with Dealmakers Africa reporting a total of 397 deals worth $65.5 billion.

This represents a 25 per cent increase in deal volume and a 45 per cent increase in deal value compared to the previous year.

One of the most notable deals of the year was the acquisition of South African retail giant, Massmart by Walmart.

The US retail giant had been eyeing Massmart for several years, and the $4.2 billion deal finally went through in May 2022.

Significant foothold

The acquisition gives Walmart a significant foothold in the South African market and expands its presence in Africa. Another major deal was the acquisition of Ethiopian Airlines by Turkish Airlines for $1.5 billion.

The deal gives Turkish Airlines access to Ethiopian Airlines’ extensive network in Africa and strengthens its position as a major player in the African aviation market. In the financial sector, Nigeria’s Access Bank completed the acquisition of South African lender, Grobank, for $131 million.