On Monday 23rd of January 2018, the world’s leading source of intelligent information for businesses and professionals, Thomson Reuters, released the 2017 investment banking analysis for the Sub-Saharan Africa region. According to estimates from Thomson Reuters, Sub-Saharan Africa investment banking fees reached $527.9 million in 2017, 0.1 percent less than the value recorded in 2016. Fees from completed Mergers & Acquisitions totalled $94.5 million, a 19 percent down year-on-year, while equity capital markets underwriting fees fell 16 percent to $144.8 million.
Sneha Shah, Managing Director, Africa, Thomson Reuters, said: “The value of announced Mergers & Acquisitions (M&A) transactions, with any Sub-Saharan Africa involvement, reached $32.4 billion during 2017 – the lowest since 2012. Inbound M&A also reached a 3-year low of $14.4 billion with the United States, the United Kingdom and Switzerland leading investments. Outbound M&A also declined 44 percent to $7.8 billion in 2017.”
Syndicated lending fees also declined, falling 5 percent from this time last year to $180.9 million. Fees from debt capital markets underwriting saw an increase from $47.9 million during 2016 to $107.7 million during 2017 – the highest value since our records began in 2000. Debt capital markets’ underwriting fees accounted for 20 percent of the overall Sub-Saharan Africa investment banking fee pool, the highest first-half share since 2012. Both completed M&A and equity capital markets generated 18 percent and 27 percent of the total fee pool respectively, while syndicated lending fees accounted for 34 percent.
Citi earned the most investment banking fees in Sub-Saharan Africa during 2017, with a total of $43.9 million or an 8.3 percent share of the total fee pool. Investec topped the completed M&A fees while Java Capital led the ECM underwriting fee ranking and Citi the DCM underwriting fee ranking with a 16.6 percent share. Standard Chartered ranked first for syndicated loans fees.
Domestic and inter-Sub-Saharan Africa M&A totalled $5.8 billion, down 1.9 percent year-on-year. South Africa’s overseas acquisitions accounted for 65.6 percent of Sub-Saharan Africa outbound M&A activity, while acquisitions by companies headquartered in Mauritius and Seychelles accounted for 31.7 percent and 2.6 percent respectively.
Exxon Mobil Corp also agreed to buy a 25 percent stake in a Mozambique liquefied natural gas project from Italy’s Eni SpA for $2.8 billion.
“The deal was the largest to be announced in the region during the year and helped to boost the value of deals in the Energy and Power sector to $6.4 billion, it is also worth noting that five out of the top 10 deals recorded this year were announced in Q1 – making it the strongest quarter of the year – accounting for 36 percent of the total M&A activity in the region,” Sneha added.
Goldman Sachs topped the 2017 Sub-Saharan Africa Involvement Announced M&A Financial Advisor League Table with a 15.1 percent share of the market.
In equity capital markets, Sub-Saharan Africa equity and equity-related issuance stand at its second highest volume since 2007, totalling $9.6 billion during 2017, 11 percent more than the value recorded during the same period in 2016. Barclays Africa Group’s follow-on offering topped the ECM deal list, followed by Steinhoff Africa Retail Ltd IPO, Vodacom Group and Sibanye Group as the top deals for 2017.
“Looking back at the quarterly activity, despite having the lowest number of deals, Q2 saw the highest level of activity with $4.2 billion in M&A transactions,” says Sneha.
Follow-on offerings accounted for 71percent of the ECM activity in the region by value, while IPOs and convertibles accounted for 18percent and 11percent, respectively. Morgan Stanley topped the Sub-Saharan Africa ECM league table during 2017 with a 19 percent share of the market.
Sub-Saharan Africa debt issuance raised a total of $28.5 billion in proceeds during 2017. This is a 27 percent increase from the value recorded during the same period in 2016. The Ivory Coast was the most active issuer nation with $10.3 billion in bond proceeds, which accounted for 36 percent of market activity, followed by South Africa and Nigeria.
Citi took the top spot in the Sub-Saharan Africa bond ranking for 2017 with $5.8 billion of related proceeds or a 20.3 percent market share.