The one bright spot in some exceedingly gloomy African M&A data

Over a dozen African elites and their family members have been linked to offshore holdings.
Over a dozen African elites and their family members have been linked to offshore holdings.
Image: Reuters/Thomas Mukoya
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The world remains ravenous for big M&A deals. This year alone has seen a 21% jump in the value of deals compared to the same time last year, totaling $21 trillion.

But for Africa and the Middle East, things are not looking so rosy. For the first three quarters of 2015 the region has claimed a mere 1% share of the deals, a new report (pdf) by Mergermarket shows.

Much worse, the value of deals in the region has fallen 21% over the same period last year, and is at its lowest since 2009.

But amid this gloom, there’s one positive—and surprising—development. African companies are asserting themselves outside Africa more than ever before.

In September, news broke that Shoprite, the continent’s largest retailer, was looking to buy Morrison’s, a British supermarket chain. In April, BRAIT, the same group that owns Shoprite, paid $1 billion to acquire Virgin Active, the British health chain previously owned by Richard Branson.

SABMiller, the South African brewer, which took over the British outfit Meantime Brewery Company in May, is about to merge with the Belgian beer maker Anheuser-Busch InBev. This would help it become a part of one of the biggest brewers in the world. And earlier this year, Aliko Dangote, Africa’s richest man, expressed interest in buying Arsenal, one of the world’s most recognizable brands in club football.

Overall, 28 deals, worth $7.4 billion, have involved African companies buying or merging with non-African outfits—about an 82% jump in value over the same period last year.

South African companies are the most active players here, accounting for 91.6% of the deals outside of Africa. And although earlier this year there were signs of an emerging trend in cross-border deals within the continent, intra-African M&A has nearly halved, to $12.6 billion, the lowest such value since 2005, the report notes.

“For South Africa, in particular, there is not much domestic deal-making,” Kirsty Wilson, Mergermarket’s global research editor, tells Quartz. “They are not buying domestic companies as often as they are looking outside of the region towards Europe. As a result of that, these companies in South Africa have a lot more firepower attached to them compared to other companies in Nigeria, for example.”

Traditional areas such as energy and mining still attract the largest value of M&A deals in the region. But this year’s value of deals has yet to catch up to the 2013 high of $20 billion. This is mainly due to the fact that Africa and the Middle East are still feeling the effects of last year’s oil crash, Wilson explains.

And despite talk of how the slowdown in China, increasingly Africa’s biggest trading partner, may may hurt the continent’s growth, it’s too soon to tell how it will affect its M&A. “Traditionally in M&A, if something happens at the macro level, normally it takes six to seven months before we start feeling any effects,” Wilson says.