Value of deals fall by half in quarter one

The value of investment and corporate deals in East Africa nearly halved in the first quarter of the year compared to a similar period in 2018, in the absence of large ticket offerings seen the previous year.

Deals data compiled by I&M Burbidge Capital shows the total disclosed value of deals in the region stood at Sh66 billion, compared to Sh110 billion last year.

The majority of the deals so far this year have been in Kenya—largely private equity deals, mergers and acquisitions in the health, financial services and ICT sectors—I&M Burbidge said in its East Africa Financial Review report for quarter one.

“March closed off the first quarter of 2019 with five deals valued at about $39 million (Sh3.9 billion). This brings the total (disclosed) deal value and volume for the quarter to $653.9 million (Sh66 billion) and 20 respectively compared to $1.09 billion (Sh110 billion) and 16 deals during the first quarter of 2018,” said the I&M Burbidge report.

“It is important to note that the quarter one 2018 deal value was skewed by the $1.04 billion (Sh104 billion) acquisition of Saham Finance by Sanlam.”

The deal that went through in March last year saw South African firm Sanlam pay the Sh104 billion to take up the 46.6 per cent stake it did not already own in Moroccan insurer Saham.

In the first quarter of this year, the standout deal has been the acquisition of London-listed Lamu oil prospector Ophir Energy by Indonesian oil giant Medco Energi for Sh51.7 billion.

Ophir had earlier announced plans to sell its oil exploration investments in Block L9 in Lamu County, citing insufficient returns and accumulated losses. The exit came after the firm wrote off Sh6.3 billion ($62.7 million) in losses incurred in the process of searching for hydrocarbons in the area.

In the number of deals during the quarter, private equity led with 10, followed by mergers and acquisitions at seven deals. There were two joint venture deals and one PE exit in the period.

The value of the deals was, however, skewed heavily towards mergers and acquisitions, which were valued at Sh52.2 billion in the period, while PE deals were valued at Sh11 billion.