EA deals grow by a fifth in first four months

The number of corporate deals in East Africa went up by a fifth in the first four months of the year compared to a similar period last year, with Kenya accounting for two thirds of the disclosed agreements.

Analysis by advisory firm I&M Burbidge Capital shows the number stood at 31 for the four months, compared to 26 last year.

Private equity deals were the most common at 17, followed by mergers and acquisitions at 10, two partnerships or strategic alliances and one each for joint venture and capital restructuring.

Kenya accounted for 21 of the 31 deals, followed by Ethiopia, Rwanda and Tanzania with four, three and two deals respectively.

“Deal activity in April brought the total number of deals for the year thus far to 31 with a total disclosed deal value of about $360 million (Sh38.5 billion), most of these being private equity investments,” said I&M Burbidge in the report.

“The transactions were spread out across eight sectors with the financial services sector recording six transactions,” it said.

The firm added that most of the announced deals were well underway before the eruption of the Covid crisis as transactions in the region, particularly equity ones, tend to, on average, take about a year or slightly more to complete.

I&M Burbidge expects firms that are providing critical services during the virus crisis to attract more investor interest, offering hope that the deal pipeline will not dry up in coming months as a result of the travel restrictions and capital drought.

“An increasing interest, particularly by development finance institutions, in companies that are now crucial during this time (of Covid-19) such as delivery and logistics companies has been noted and is expected to increase as more investors are drawn in by the humanitarian and economic value of such investments,” said I&M Burbidge.

The value of disclosed deals last year stood at $847.4 million (Sh90.7 billion) in the first four months, largely on the back of a Sh51.7 billion deal in January 2019 by Indonesian oil giant Medco Energi to buy London-listed Ophir Energy.