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M & A transactions in South Africa declined in volume and value of domestic and cross-border transactions, according to Baker McKenzie's badysis of Thomson Reuters merger data and acquisitions for South Africa. 44% and 52% by volume and value, respectively, in the first half of 2018 compared to the first half of 2017.
In the first half of 2017, 243 transactions totaling $ 6.625 million in South Africa were reduced to 135 Morne van der Merwe, Managing Partner and Head of Firm / Mergers & Acquisitions at Baker McKenzie in Johannesburg, said: "Several factors have contributed to the contraction of the M & A market in South Africa. "First of all, this decline in mergers and acquisitions activity shows that we should not underestimate the impact of corruption and sub-optimal governance in South Africa on the mood investors. "
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" It has proven too easy for companies to be trapped in these problems. There are various examples of multinationals in South Africa and elsewhere in Africa that have been mixed up in corrupt environments and there are serious consequences to that. In the United States and the United Kingdom, for example, anti-corruption and bribery laws result in significant penalties for non-compliance.
"Investor reluctance is not just about government corruption," said van der Merwe. "Steinhoff's speech has put South Africa in the spotlight and raised concerns about governance in the private sector."
"In addition, economic concerns, the threat of a downgraded credit rating, the fact that South Africa is close to its next election means that investors are also holding back, adopting a "wait-and-see" approach There are also two major political problems that cause uncertainty and affect confidence and appetite for investment, land reform and health insurance
"In some areas, there are also problems. For example, mergers and acquisitions in the mining sector in South Africa have declined significantly due to regulatory uncertainty. "
Among recent interesting developments, there is the announcement that the South African Airways troubled state company will consider a partial privatization." Is an allusion to the change in government policy on the issue of privatization, this could boost investment and be good news for the mergers and acquisitions market, depending on the government's success in managing stakeholder engagement. "
Inbound
In terms of sectors attracting investment in mergers and acquisitions, the report shows that Industrials recorded the largest number of incoming cross-border transactions in South Africa during this period (22%)
Overall value-based execution sector accounting for 91% of the total There were eight incoming transactions in the industrial sector in South Africa in the first half of 2018, p. for a value of $ 362 million.
"There are many opportunities in the industrial sector in South Africa, managed to keep the course in a difficult environment." Inbound investment in the industrial sector is also a good entry point into African economies because this sector is an area of interest for many developing economies across the continent, "he said
. international development of a "new economy" based on artificial intelligence, sophisticated systems and markets.
"We should ensure that South Africa and other African countries are not left behind. We must encourage innovation, technological progress and skills development and enforce laws to protect innovators and users. "
According to the report, Mauritius has had the largest number of transactions (eight in all) in South Africa during the first six months of the year. Explains by the fact that the main transaction entering the first half of 2018 was the merger of the Singapore and South African business units of Grindrod Shipping Holdings, valued at $ 320 million.
the radar in as an investment center in Africa, mainly because of the favorable tax regime that they introduced.Mauritius has made it much easier to set up businesses in Mauritius and structuring business. investment in Africa by the companies and service providers that manage the investment holding companies, "van der Merwe
Outbound
were mainly distributed among the sectors of materials, industry, consumer products and high technology services (advanced technology), each accounting for a 11% share of trading volume. Each of these sectors made five outbound transactions in the first half of the year
. However, in terms of overall value, the financial sector was the most popular, accounting for nearly half of the total value – $ 1,050 million – in the first half. 2018.
In terms of outbound transaction destinations, South African firms mainly have agreements with the United Kingdom (10 transactions representing 23% of the total transaction volume). The United Kingdom has the largest total transaction value, accounting for 48% of the total
thanks to Sanlam Ltd's purchase of Saham Finances SA of Morocco for $ 1.1 billion.
"The ease of doing business with the UK about various factors including, language, time zones, easy access, historical links and familiarity, meant that Investment between the two countries has always been good. The Brexit has had a positive impact on investment between the UK and South Africa in that it has spurred awareness initiatives in the UK to various of its historical trading partners , including South Africa. in 2018
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