Nigeria remains one of the top economies in Africa on investor interest in Mergers & Acquisitions, M & A, deals across the majority of sectors, despite current lingering downturn in the commodities cycle and associated currency risk.
This is one of the key findings of the fourth edition of “Deal Drivers Africa”, published by Mergermarket in collaboration with Control Risks, an independent global business risk consultancy with 36 offices across the globe.
The report showed that after several years of steadily increasing M&A activity, African deal making had made the final step to firmly entrench itself into the global marketplace.
According to the publication, South Africa, Nigeria and Kenya are seen as the most attractive target countries for M & A activity on the continent, with 100 per cent of respondents believing that cross-border deal making between African countries will continue to increase.
Other key findings of the publication are that respondents expect most foreign buyers of African companies in 2016 to come from Europe (41%), Asia-Pacific (39%) and North America (16%) while energy, mining and utilities are expected to generate the most M&A activity in Africa (79%), with industrial & chemicals being viewed as the second busiest sector in the next 12 months (72%).
Similarly, the report showed that regulatory uncertainty, particularly compliance and integrity issues, are highlighted as the principal obstacle to M&A activity in Africa (86%), followed by operational and security risks (77%). Cyber security is given highest importance by 60% of respondents when doing an M&A deal in Africa.
Reflecting on the findings, Senior Managing Director for Southern Africa at Control Risks, George Nicholls, noted that “M&A activity in Africa is currently driven by many factors namely, that downturns in more established markets make international buyers look out for new targets while capital is more easily available and high-quality targets are offered at very attractive prices.