adminNairobi. — Some 115 merger and acquisition deals carried out in Africa during the first three quarters of 2013 were worth US$26 billion, a new report by the Merger Market Group shows. According to the report, the accelerated activity was driven by Africa’s growth rates and future prospects, which outdo other regions.
The continent’s vast untapped resources in the energy and mining sectors have also seen it emerge as a favourite investment destination for multinationals from Europe, America and Asia.
“Over the past decade, Africa has been a vibrant region for mergers and acquisitions, which has held up well even at a time of global uncertainty.
“This resilience has been fuelled by the region’s consistently high rates of growth and corresponding rates of return, which have been a key attraction for investors.
“The region’s huge wealth of untapped resources has for long made energy, mining, and utilities a stand out sector for mergers and acquisitions,” reads part of the report.
Energy, mining, and utilities account for the largest share of the volume and value of the deals, accounting for 21 per cent of the total mergers and acquisitions carried out between 2006 and 2011.
“Most recently, between 2012 and 2013, the number of deals in energy, mining and utilities has stayed at the same percentage of the total, but the deal values have shot up by US$32 billion, over half of the total value of mergers and acquisitions since the beginning of 2012,” says the report.
A number of African countries have vast petroleum, natural gas and mineral deposits that are awaiting exploitation. Kenya, for instance, struck deposits of oil in March last year.
A serious of other discoveries have been made at Lokichar basin in the northern part of the country.
British firm Tullow Oil Plc, which made the discoveries, has already termed the local oil deposits as “meeting the threshold for development”.
Uganda and Tanzania have also discovered oil and natural gas, respectively, in commercially viable quantities. Tanzania is already utilising the resource for generation of electricity while Uganda is awaiting commencement of oil production.
These discoveries have positioned East Africa as an emerging oil and natural gas hub, attracting investors from around the globe.
The Merger Market report says the Asian continent has demonstrated growing interest in mergers and acquisitions in Africa, almost beating Western Europe, which has maintained second position since 2006. — The Nation.
Online Reporter