Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, Thursday released the quarterly investment banking analysis for the Sub Saharan Africa region.
During the first half of 2014, investment banking fees in Sub Saharan Africa totaled US$124.2 million declining 25% compared to the first half of 2013 and marking and the lowest fees recorded since 2010. In respect to the Mergers and Acquisitions (M&A) activity, the value of announced transactions involving Sub Saharan African targets reached US$8.3 billion during first six months of 2014. The most targeted country was South Africa with 52% of the overall M&A activity.
Keith Nichols, Managing Director, Africa, Thomson Reuters, said: “Equity Capital Markets (ECM) issuance in Sub Saharan Africa totalled US$2.9 billion during the first half of 2014. Around 75% of deals involved a South African issuer. Sub Saharan African debt capital issuance recorded US$5.2 billion during the first half of 2014 marking the highest first half since 2011.”
Investment banking fees from advisory on completed M&A transactions dropped 31% to US$26.2 million during the first six months of 2014, marking the lowest first half total for M&A fees in the region since 2003. Debt capital markets underwriting fees totalled US$13.0 million, 14% up from the same period last year, while syndicated lending fees fell 76% to US$18.3 million. Fees from equity capital markets underwriting increased 65% to US$66.7 million, marking the highest first half total in the region since 2007.
Investment banking equity fees accounted for 54% of the Sub-Saharan African fees, the highest share of a first half fee poll since our fee records began in 2000. Citi topped the Sub Saharan African fee league table during the first half of 2014, with a 13% cut of the fees. Investec and Rand Merchant Bank followed in second and third positions, respectively.
Speaking about the M&A activity, Mr. Nichols said: “The most targeted nation by value so far this year was South Africa, accounting for 52% of activity, followed by Angola (11%) and Ivory Coast (8%). The United Kingdom was the most active foreign buyer in the region.”
“Theme International Holdings’ US$1.0 billion offer for oilfield exploration and production company Everest Hill Energy Group is the largest deal to be announced in the region so far this year. Boosted by this deal, Energy & Power was the most active sector, accounting for 33% of first half deals. Rothschild moved up 15 places from this time last year to take the top spot in the 1H 2014 announced any Sub Saharan African involvement M&A Ranking, with US$3.1 billion,” he added.
Mr. Nichols commented on the ECM activity during the first half of 2014. He pointed out that proceeds raised from follow-on offerings accounted for 55% of ECM activity, while initial public offerings and equity-linked issuance accounted for 23% and 22%, respectively.
“Energy & Power was the most active sector for equity issuance in the region, followed by Financials. The largest IPO, and the second largest equity offering during the first six months of the year, was from Nigerian-based Seplat Ltd. The oil company raised US$540.5 million in a dual listing on the London and Nigerian Stock Exchanges in April. Rank Merchant Bank took the top spot in the Sub Saharan African Equity Capital Markets league table during the first half of 2014, with 18% of the market,” he noted.
Speaking about debt capital markets in Sub Saharan African, Mr. Nichols pointed out that debt issuance during the first half of 2014 marked the highest first half total since 2011.
He concluded: “The African Development Bank, headquartered in the Ivory Coast, raised a total of US$2.7 billion, accounting for 53% of activity in the region. Deutsche Bank took the top spot in the Sub Saharan African Debt ranking for the first half of 2014 with US$1.2 billion, or a 22% share. Barclays and Citi followed in second and third positions.”