Quarterly investment banking analysis for Sub-Saharan Africa shows overall decline

Sneha Shah, Managing Director, Africa, Thomson Reuters.

• Sub-Saharan African investment banking fees reached US$173.9 million in first half of 2016, a 22% decline compared to the value recorded during the same period of last year. • Fees from completed M&A transactions totalled US$54.8 million, a 43% decrease from the comparative period last year and the lowest first half period since 2014. • Fees from debt capital markets underwriting declined 66% year-on-year and reached US$12.3 million.

Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, today released the quarterly investment banking analysis for Sub-Saharan Africa.

According to estimates from Thomson Reuters / Freeman Consulting, Sub-Saharan African investment banking fees reached US$173.9 million in first half of 2016, a 22% decline compared to the value recorded during the same period of last year. Fees from completed M&A transactions totalled US$54.8 million, a 43% decrease from the comparative period last year and the lowest first half period since 2014. Fees from debt capital markets underwriting declined 66% year-on-year and reached US$12.3 million.

Sneha Shah, Managing Director, Africa, Thomson Reuters, said: “According to estimates from Thomson Reuters / Freeman Consulting, Sub-Saharan African investment banking fees reached US$173.9 million in first half of 2016, a 22% decline compared to the value recorded during the same period of last year. Fees from completed M&A transactions totalled US$54.8 million, a 43% decrease from the comparative period last year and the lowest first half period since 2014. Fees from debt capital markets underwriting declined 66% year-on-year and reached US$12.3 million.”

“Syndicated lending fees increased 49% from over a year ago to US$53.6 million. Equity capital markets underwriting fees dropped 5% to US$53.3 million, and accounted for 31% of the overall Sub-Saharan African investment banking fee pool. Sumitomo Mitsui Financial Group earned the most investment banking fees in Sub-Saharan Africa for the first half of 2016, with a total of US$22.1 million and captured 12.7% share of the total fee pool. Morgan Stanley topped the completed M&A and ECM fee rankings during first half of 2016, capturing 21.6% of the M&A fee share and 16.3% of the ECM fee share. JP Morgan holds first place for DCM underwriting fee rankings with 14.8% share. Sumitomo Mitsui Financial Group ranked first place for syndicated loans fees and captured 41.1% of the loans fee share,” she added.

The value of announced M&A transactions with any Sub-Saharan African involvement reached US$12.8 billion for first half of 2016, a 27% decline in deal value compared to the first half of 2015. Outbound activity increased 44% compared to the first half of 2015 and reached US$4.1 billion in deal value. South Africa’s overseas acquisitions accounted for 82% of Sub-Saharan African outbound M&A activity, while acquisitions from Mauritius and Nigeria companies accounted for 12% and 5%, respectively. Inbound M&A reached US$5.4 billion, up 49% from over a year ago. Domestic and inter-Sub-Saharan African M&A totaled US$2.4 billion, down 63% from the comparative period last year. The Materials industry was the most active sector with US$4.0 billion worth of deals, and accounted for 31% of Sub-Saharan African involvement M&A. The largest deal with Sub-Saharan African involvement during the first half of 2016 was China Molybdenum Co Ltd’s pending acquisition of the entire share capital of Freeport-McMoRan DRC Holdings Ltd for US$2.77 billion.

Citi topped the first half 2016 Any Sub-Saharan African Involvement Announced M&A Financial Advisor League Table with US$4.2 billion in related deals and captured 32.7% market share.

Sub-Saharan African equity and equity-related issuance totaled US$ 4.0 billion during the first half of 2016, an 18% increase in value from the first half of 2015. This is the highest first half period for the region’s ECM activity since 2007. Two initial public offerings raised US$44.7 million and accounted for 1% of the ECM activity in the region, while follow-on offerings and convertibles accounted for 55% and 43% market share, respectively. Steinhoff Finance Holding GmbH raised US$1.2 billion through a convertible issuance in April, the largest ECM offering in the region so far this year. Morgan Stanley took the lead during the first half 2016 Sub-Saharan African ECM ranking with a 16% market share.

Sub-Saharan African debt issuance raised a total of US$6.9 billion in proceeds for first half of 2016, a 10% decline compared to the same period last year. Ivory Coast was the most active issuer nation with US$4.1 billion in bond proceeds which accounted for 59% of market activity, followed by South Africa with 31% market share worth US$2.1 billion in proceeds. The South African government offered the largest bond issuance for the region this year with its US$1.2 billion 4.875% 10-year US-dollar Global bonds offering due on April 2026. Bank of America Merrill Lynch took the top spot in the Sub-Saharan African bond ranking for first half of 2016 with US$1.0 billion related proceeds, capturing 15% of the market share.

To see SUB-SAHARAN AFRICAN IB ANALYSIS click here.