The value of global mergers and acquisition (M&A) has declined by 27.4 per cent to $1.8trillion between January and August 2016, according to data obtained by THISDAY on Monday. The data contained in the Global Merger Report showed that value of M &A was $2.5 trillion between January and August 2015.
However, is has declined by 27.4 per cent this year. Monthly analysis of the data indicated that the value fell by 34.7 per cent to 946 deals worth $182.2 billion, the lowest value since August 2013.
Private equity was less active on the buyout side in August 2016 with only 138 deals worth $18.9 billion, down 51.3 per cent by value compared to the same period last year (199 deals worth $38.9 billion).
“Exits, on the other hand, were relatively stable with 138 deals worth $42.3 billion, a slight 1.1% decrease compared to August 2015 ($42.8 billion). Energy, Mining & Utilities (EMU) was the most active sector in August, contributing 15.8 per cent to the total global market share with 84 deals worth $28.8 billion, despite a 28.1 per cent drop compared to August 2015 ($40 billion),” Mergermarket intelligence said.
M&A activity targeting the Middle East & Africa region during August stood at 24 deals, worth $2.8 billion, showing a decline of 10.9 per cent compared to August 2015 when 30 deals, worth $3.1 billion was recorded. The highest valued inbound deal saw Singapore-based investment firm Yangon Investment acquiring a 52.3 per cent stake in Israeli insurance firm The Phoenix Holdings, for a total of $518 million.
In Africa, despite an overall decline in deals targeting the rest of the world, South Africa continues to dominate the region’s outbound M&A activity, accounting for a 39.2 per cent share in total outbound deal value. This figure has decreased 12.3 per cent by value to $5.9 billion in 2016, down from US$6.7bn during the same period of 2015. The deal volume, however, has increased by six to reach 21 deals to date in 2016.
According to Mergermarket intelligence, while cash-rich South African companies will continue to eye opportunities for diversification and exposure to hard currencies, many will wait to see how the British exit from the European Union (EU) could impact European growth prospects.
The continent has been one of the favoured deal destinations for South African growth due to similar time zones, relatively cheap debt and exposure to hard currency.
Domestic activity remained strong throughout 2016, with 118 deals worth $32.1 billion, representing a 192.9 per cent rise in deal value compared to the same period in 2015 ($11.0 billion in 175 deals). The transaction between South African firms Redefine Income Fund and The Pivotal Fund, valued at $756 million, was the largest deal targeting the region in August.