NAIROBI: The East African region closed 145 publicly announced deals for a total value of $3.4 billion (Sh309.4 billion) last year, a new report shows.
The East African Financial Review 2014 report by advisory firm Burbidge Capital says last year’s deals jumped 49 per cent compared to those in 2013. The highest number of deals occurred in the natural resources sector, which saw 38 deals closed in 2014 from 22 in 2013 with Kenya and Tanzania accounting for more than 80 per cent of the deals. The study found out that the financial services received high interest from investors last year, recording 30 deals valued at $515.8 million. “We expect the insurance sector, which saw the entry of global insurers Swiss Re and Prudential plc in Kenya in 2014, to maintain its lead position in 2015 due to the imminent high growth potential for the industry as well as the higher capital demands,” said Edward Burbidge, the CEO of Burbidge Capital.
On Monday, Old Mutual, which is expanding in Africa to profit from the continent’s fastest-growing economies, announced that it is increasing its stake in UAP to 60.7 per cent after purchasing a further 37.3 per ncent stake for $155.5 million in cash. The transaction takes its investment in UAP this month to $253 million (Sh23.023b). Recently, Britam acquired its rival Real Insurance, while Morocco-based Saham Insurance bought Mercantile Insurance.
Private Equity
A deal between Gateway and Pan Africa Insurance is expected to be completed this month. Mauritius Union Insurance also received approval to acquire Kenyan-based Phoenix of East Africa Assurance. Burbidge said last year saw an increase in the number of Private Equity (PE), mergers and acquisition deals in the region. However, he said private equity exits are becoming more common in the region, with a total of five PE exits witnessed in 2014.
The report predicts that there would be even more deals completed in 2015. In the listed equities segment, the report revealed it was an exciting year for the securities exchange in Kenya, which saw the introduction of three new companies onto the Growth Enterprise Market Segment of the Nairobi Securities Exchange.
“We expect an increase in corporate deal-making in 2015,” Burbidge predicted.
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