Mergers and acquisitions activity is on the increase in Africa, with the number of deals in 2013 close to the record high reached in 2007, an encouraging sign for private equity groups looking to exit investments on the continent, according to a new report by RisCura, a Cape Town-based consultancy.
Last year, there were 991 reported M&A transactions in Africa, up 13 per cent from the previous year and close to the 1,019 deals before the global financial crisis, as illustrated in the chart below from RisCura’s 2014 Bright Africa report out on Wednesday.
For the first time, transnational corporations from emerging market (EM) countries spent more on foreign acquisitions last year than companies from developed market (DM) countries, according to a study by the United Nations Conference on Trade and Development.
Led by some record breaking acquisitions by Chinese and Russian companies, EM transnational corporations (TNCs) accounted for 56 per cent of total cross-border transactions in 2013, the study found. In total the value of cross-border M&A deals – from EM and DM sources – rose 5 per cent in 2013 to $349bn.
Sun Pharmaceutical Industries, India’s biggest drugmaker by market value, agreed this week to buy its competitor, Ranbaxy, for $3.2bn from Japan’s Daiichi Sankyo, which paid 61 per cent more for the Indian company five years ago.
But given that Ranbaxy has been troublesome for its Japanese owner, what chance does Sun have of realising its aim to create synergies from the deal worth $250m over the next three years?
A sliding rupiah, slowing economic growth and fast-rising costs are not exactly good news for Indonesian companies selling to the large consumer market, many of which have US dollar debts and US dollar costs.
But the squeeze could be a boon for Japanese, Korean and Western companies who have been looking to buy into Indonesia’s consumer goods sector – and the bankers who advise them.
There’s no doubt about it, 2013 was a tough year for the Indian economy. Growth slumped to below 5 per cent, a currency crisis swept through emerging markets battering the rupee, and all predictions for the economy hung – as they still do – on the upcoming general elections.
It doesn’t sound like the ideal investment climate. But professional services firm, Grant Thornton, insists that M&A activity in India was better than expected over the calendar year. Activity may be down, but given all that happened last year, it’s not down that much.
Africa is at the forefront of bringing financial services to the “unbanked” and new opportunities to seasoned investors. In Monday’s FT special report on Africa Banking and Finance, our correspondents examine the continent’s enormous potential and challenges, writes Justin Cash.
Africa editor Javier Blas looks at the growth of sharia-compliant investments across the continent, whilst Anousha Sakoui assesses bright new prospects for M&A activity.
Nokia, the Finnish telecoms group, asked the Delhi High Court on Thursday to release factory assets frozen by tax authorities this year, as it prepares to hand its mobile devices unit to Microsoft.
Back in September Microsoft announced plans to buy the loss-making business from cash-strapped Nokia for €5.4bn. But in India, the deal faces a small complication: a $321m tax dispute in which Nokia’s local assets were frozen. Bank accounts have subsequently been released but fixed assets – including a factory in Chennai – remain stuck in limbo.
It takes a big man to admit when he’s wrong. And love him or hate him, you have to give props to Carlos Slim, the Mexican tycoon, for walking away from his proposed €7.2bn bid for KPN on Wednesday.
As beyondbrics has previously noted, the deal never made that much sense on paper. For starters, to finance the €2.40 per share offer, AMX would have risked having to cancel a share buyback and raise $4bn of debt financing. In addition, buying KPN would have meant swallowing €9.5bn of debt. Both moves would have put AMX’s cherished A2 Moody’s and A- Standard & Poor’s ratings at risk.
The math for the deal never made too much sense and it looks like Carlos Slim has finally seen the light.
On Wednesday, Slim’s América Móvil said in a SEC filing that it was withdrawing its proposed €7.2bn offer for KPN. It cites the inability to overcome the poison pill defence adopted by Foundation Preference Shares B KPN, an independent foundation charged with protecting the Dutch telecoms group, as the primary reason for walking away.
Investors have given a thumbs up to Fortis Healthcare, the Indian hospitals chain, after it announced plans on Monday to sell its private clinic network in Hong Kong to Bupa.
Shares in Fortis rallied 6.5 per cent on Tuesday morning before moderating to close up 0.7 per cent at Rs105.25.
By Jochum Haakma of TMF Group
The ink is barely dry on the latest iteration of the IMF’s World Economic Outlook and once again China and, more specifically, the health of its economy finds itself back under the global spotlight. But rumour and speculation are no strangers to China and while debate about a hard landing and slowdown may continue, on the ground, sentiment remains positive.
Such confidence is good news, not only for those countries that have fuelled their own growth clutching the coattails of China’s incessant demand for commodities, but also for less established trade partners in more advanced economies. Europe should take note.
It’s the big question in the telecoms industry right now – will Telecom Italia sell its controlling stake in Brazilian mobile carrier Tim Participações?
After being downgraded to junk on Tuesday by Moody’s, the Italian operator sure needs the cash. And Spain’s Telefónica, which struck a deal last month to secure control of Telecom Italia, is believed to be firmly in favour of offloading the Brazilian unit. But who would buy it?
In a country’s whose telecoms sector has long been dominated by foreign companies, the merger on Tuesday of Portugal Telecom and Oi may be a move towards creating a Brazilian national champion in the sector.
Who says sewage treatment can’t be a sweet smelling business?
Certainly not Singapore’s GIC. The city state’s sovereign wealth fund has just struck a deal to invest R$300m ($135m) in Aegea Saneamento e Participações, the water and sewage treatment arm of Grupo Equipav, the Brazilian conglomerate.
“Aegea manages an attractive portfolio of water and sewage concessions in Brazil. We are delighted to have Equipav and IFC as our partners and look forward to working with the shareholders and management to help grow the company,” said Tay Lim Hock, president of GIC Special Investments, in a statement on Tuesday.
Canada-based Pacific Rubiales Energy, Colombia’s leading independent oil company, which is ranked amongst the world’s fastest growing crude producers, announced on Sunday it has agreed to buy Petrominerales, a smaller company operating in the Andean country.