2012 DEAL DRIVERS africa - Mergermarket · deal volume, but by 2011, there were 20 deals in the Us$500m+ category, accounting for 10% of total volume. Meanwhile, in terms of deal

DEAL DRIVERS africa2012a comprehensive review of african M&a

Published by:

2012 edition

in association with:

CONTENTS

Foreword 3

Overview: M&A activity in Africa 5

Methodology 7

Survey findings 9

General Trends in M&a 10

cross-border insights 13

M&a advisory experience 20

Feature: Inbound M&A in Africa 24

Feature: Private equity in Africa 28

About ENS 32

About Nedbank 33

DEAL DRIVERS – AFRICA in associaTion wiTh Ens and nEdbank caPiTal

03

africa’s strong economic growth has created a dynamic and busy M&a environment: deal volumes have increased significantly since 2005 and respondents are confident that this upward trend will continue. The large majority (75%) expect M&a to increase over the next 12 months, particularly in the energy and mining, consumer and telecom sectors.

The shifts in the sources of M&a activity tell an equally interesting story. foreign investors, particularly from western Europe and china, account for a significant portion of inbound M&a, but home-grown african acquirers are rapidly raising their profile. between 2005 and 2011, the proportion of deal values from domestic african acquirers increased by a third.

Taking a more granular look, south africa is responsible for a sizeable portion of african M&a, and was the target in half of the top ten deals of 2012 thus far. Two thirds of respondents also believe that south africa will be the busiest in terms of cross-border activity, due to what many describe as a more familiar and mature business environment.

Welcome to the inaugural edition of Deal Drivers Africa, published by mergermarket in collaboration with ENS and Nedbank Capital. Based on interviews with 100 M&A practitioners operating in Africa, including corporate executives, private equity investors, legal advisers and investment bankers, this report provides invaluable insight into the African M&A market from those who know it best.

FOREwORD

The reasons behind african M&a’s impressive rise are diverse. for starters, international investors, often with stalling economies in their own countries, are enticed by the region’s growing middle classes and ever-increasing demand. These two points are mentioned repeatedly by respondents throughout this study.

despite these overwhelmingly positive findings, however, political and regulatory risks still loom – and are considered by respondents to be the biggest hindrances on african M&a. north africa, the hotbed of recent political turmoil, also lags behind other regions in activity, and may prove problematic to the continent as a whole. Yet respondents are careful to point out that political unrest is more localised and does not necessarily pose a threat to other parts of the continent.

africa’s emerging markets have defied the global economic gloom, and show few signs of slowing down. The following report provides a detailed review of african M&a activity, including historical data on sector and country-specific trends. we hope you find this edition of deal drivers africa useful and, as always, welcome your feedback.


04


05OVERVIEw: M&A ACTIVITy IN AFRICA

M&a activity in africa has surged over the last decade. in recent years, while many developed economies have languished in low-growth rates and debt crises, africa has continued to be a high-growth region – and the outlook remains positive. The iMf forecasts growth in sub-saharan africa of around 5.5% in both 2012 and 2013. This compares with the iMf’s forecast for overall global growth of 3.5% and 3.9% for 2012 and 2013, respectively. by contrast, the iMf expects Euro area contraction of 0.3% in 2012 and growth of 0.7% in 2013.

but beyond comparatively strong growth prospects, there are some other important factors making africa an attractive proposition for international corporates and private equity firms looking for opportunities beyond their own sluggish markets. The business environment, for one, is becoming more investor-friendly as african governments have sought to improve their regulatory environments and reduce red tape, while there has also been an overall improving trend in democratic elections and improved governance. at the same time, the continent’s wealth of natural resources makes it a key destination for M&a activity in the extractive industries sector (especially at a time of elevated commodity prices as we have seen in recent years), and its underdeveloped infrastructure means there is huge potential for foreign investment.

The picture is far more complex, however, than foreign companies simply investing in capital-intensive sectors. Most notably, investors are excited by the rise of the african consumer. Growing rates of urbanisation, a growing work force with money to spend and the rise of a well-educated middle class is piquing investors’ interest and has resulted in a sharp increase in M&a in the consumer sector in just a few short years.

since 2005, there have been 1,562 M&a transactions in africa worth a total of Us$249bn, and in 2011 alone there were 199 deals worth a combined Us$29.8bn. one noteworthy trend has been the rise in recent years in the proportion of deals worth over Us$500m; in 2008, 13 deals in this category took place, representing 5% of total deal volume, but by 2011, there were 20 deals in the Us$500m+ category, accounting for 10% of total volume. Meanwhile, in terms of deal value, M&a transactions worth over $500m accounted for 65% of the total values in 2011, compared with 49% in 2008.

in recent quarters, M&a activity has remained relatively strong despite global economic uncertainty, with 76 deals taking place in the first half of 2012 at a total value of Us$10.2bn. deal activity in the Us$15-100m range was most prominent, accounting for 30% of the total disclosed value deals in the first half of 2012, compared with a total share of 24% in the first half of 2011. Turning to the involvement of private equity firms, in 2011 there were 20 private equity-backed transactions worth Us$4.4bn. in the first half of 2012, there have already been 17 private equity transactions worth Us$500m.

looking at the sectoral distribution of M&a activity, the standout sector is energy, mining & utilities, which accounted for 22% of all M&a value between 2005 and 2011. Meanwhile, reflecting the growth of household spending in africa, the consumer sector’s share of M&a values has risen markedly, so that by 2011, it accounted for Us$4bn worth of deals, the second largest sectoral share at 13%. This compares to its share of just 2% in 2005. when measured by deal volumes, the consumer sector’s rise has been even more pronounced; in 2005, just 12 deals (9% of the total) were related to the consumer sector, compared with 40 deals (20% of the total) in 2011, only marginally behind the number of deals (42) in energy, mining & utilities.

num

ber

of d

eals

0

10

20

30

40

50

60

70

80

90

100

Q1-Q312

Q1-Q411

Q1-Q410

Q1-Q409

Q1-Q408

Q1-Q407

Q1-Q406

Q1-Q405

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Value of deals Us$m

AFricAn M&A trends

number of deals Value of deals Us$m

deAl size splits by voluMe

0

50

100

150

200

250

300

350

20122011201020092008200720062005

28

14

25

125

49

41

52

28

20

46

30

10

51

19

13

41

39

61

22

65

51

16

93

37

13

60

64

15

88

43

21

29

31

12

47

14

40

52

12

66

33

21

96

5

7

6

>Us$500m Us$251m-Us$500m Us$101m-Us$250m

Us$15m-Us$100m <Us$15m not disclosed

num

ber

of d

eals

06


sector split by voluMe

17%

16%

18%16%

8%

8%

7%

4%

1%2% 3%

22%

15%

14%11%

10%

8%

7%

3%3%

3% 2 2

Energy, Mining & Utilities

industrials & chemicals

financial services

consumer

TMT

business services

construction

Transportation

Pharma, Medical & biotech

leisure

real Estate

agriculture

2012 YTd 2005-2011

sector split by vAlue

31%

8%

31%

2%

9%

16%

1%1% 1%

27%

18%

17%

10%

8%

8%

4%3% 2 2 1

Energy, Mining & Utilities

financial services

TMT

construction

industrials & chemicals

consumer

real Estate

business services

leisure

Transportation

Pharma, Medical & biotech

agriculture

2012 YTd 2005-2011

on a geographical basis, M&a in africa is increasingly being driven by african (rather than foreign) acquirers. in 2005, african countries accounted for 38% of total deal values and 50% of deal volumes; by 2011, these proportions had grown to 57% and 51% respectively. interestingly, the sharper increase in deal value demonstrates that african companies are increasingly making bigger-ticket transactions. beyond africa, the EU dominates as an origin for M&a transactions, accounting for 17% of total values in 2011. however, its share is falling at the expense of rising chinese participation in africa: in 2005, north asia (china, hong kong, Macau, Mongolia, north korea, south korea and Taiwan) accounted for 0% of deal values, but by 2011 it accounted for 13% of the total. Meanwhile, in terms of target countries for M&a transactions, central & southern africa dominates, accounting for over 70% of deal values since 2005, although the region’s share is trending upwards, reaching over 80% in 2011.

looking at the top deals of 2012, the largest is france Telecom’s Us$3.2bn acquisition of Egypt’s orascom (a deal worth 38% of the value of the top ten deals). Taking a broader look at the top ten transactions, mining and energy transactions dominate the list – which is to be expected given the hefty price tags that are normally attached to natural resources investments – as do consumer and telecom sector deals.

Meanwhile, in terms of target country, north africa accounts for just two of the deals, central africa for two, with the remaining six for southern africa. indeed, on a country-by-country basis, south africa takes the lion’s share, accounting for half of all the top ten deals.

on a bidder basis, the split is even with half of the bidders based within the region and half based outside africa. The Uk and france are the two most active investors into africa, and south africa is the most common domestic investor, though it is worth noting that international businesses will often use south africa as a vehicle to access other african markets.

south africa stands out as one of the most active acquirers of 2012 to date, with some notable transactions including south africa’s industrial development corporation (idc) and a black Economic Empowerment consortium buying anglo american’s scaw south africa subsidiary for Us$438m, and anglo Gold ashanti acquiring Mine waste solutions, a subsidiary of canada’s first Uranium corporation’s subsidiary, for Us$335m. These two deals which Ens advised on, with nedbank acting as the sole funder on the scaw south africa transaction, reflect the fact that, first, south africa dominates the region for M&a on the buy-side and the sell-side, and second, that african companies increasingly have the funding, sophistication and ambition to compete with global companies for the region’s assets.

The idc's proactive pursuit of strategic investments during 2012 has also culminated in the company's r3.2bn investment in the platinum and mining beneficiation industry, which provides the foundation for the creation of a large, shallow and low cost Platinum Group Metals mining complex. nedbank capital acted as the independent financial adviser to the idc on this transaction.


METHODOLOGy 07


08

94%

6%

Yes

no

08

in the third quarter of 2012, mergermarket interviewed 100 investors and advisers based in africa – including corporate executives, private equity investors, legal advisers and investment bankers – about their experience in the continent’s M&a market and their expectations in the year ahead. all responses are anonymous and results are presented in aggregate.

Have you been involved in an M&A transaction in Africa in the past three years?

In which of the following regions are you based?

48%

15%

17%

14%

6%

southern africa

north africa

west africa

East africa

central africa

09


09SuRVEy FINDINGS


1010

african firms are upbeat about the prospects for M&a activity over the coming year, with a large majority – three quarters – expecting an increase in M&a activity. as a managing director from Tunisia puts it: “The increase in the regional market size as well as the predictability, stability and improvement in the transparency of regulations and the business environment are driving the increase in M&a in africa.” Unlike many developed markets, african economies continue to expand at a robust pace, while governments across the region are keen to attract international investment; a partner at a private equity firm in Mauritius explains: “The increase in M&a activity is largely due to governments’ efforts to open up their economies for private investments. The pick-up in privatisation is opening up many sectors for foreign and private investors, leading to significant M&a activity in the region.”

More than half of respondents (58%) expect energy, mining and utilities to experience the greatest increase in M&a activity over the coming year, followed by the consumer sector (19%) and technology, media and telecoms (TMT). The continent’s huge wealth of natural resources has meant that energy and mining have long been the focus of M&a activity and this looks set to continue. according to a cfo based in Ethiopia: “The rising level of interest in mining assets from foreign firms and business leaders will drive M&a activity in the mining sector, especially in non-precious metals and coal, as the demand for these commodities is increasing exponentially to feed the industrial development of china and india.”

Yet africa is not just about extractive industries or utilities and the opportunities for M&a are expanding in line with african economies. The head of strategic development at a botswana firm says: “african villages are developing and an improvement in living standards means that the future for the consumer goods sector looks very bright. M&a activity in the fMcG sector will increase as the demand for fMcG products rises in the region.”

similarly, the TMT sector is also benefitting from the changing african economic dynamic; a director of a private equity firm in south africa says that african companies “are adopting new modern standards and technologies and so their traditional business model is being shelved. This innovation in the business model has increased opportunities for the technology sector both in hardware and software.” he also notes rising demand for new mobile and internet services as an important driver of the sector’s growth.

How do you expect the level of M&A activity to change over the next 12 months?

In which of the following sectors do you expect to see the greatest increase in dealmaking activity over the next 12 months?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Business Services

Transportation

Leisure

Construction

Pharma, Medical& Biotech

Other

Industrials

Financial Services

TMT

Consumer

Energy, Mining& Utilities 58% 20% 12%

19% 15% 13%

10% 12%17%

5% 7% 8%

4%12% 15%

5% 2%5%

1% 2%5%

1%9% 14%

2%5%

5% 7%

2%6%

Percentage of respondents

Greatest increase second greatest interest Third greatest interest

GENERAL TRENDS IN M&A

16%

23%

59%

2%

increase greatly

increase

remain the same

decrease

11


11

in terms of the buy-side drivers behind M&a activity over the coming year, the picture is more complex. The most prominent driver cited (30%) is supply-side developments, such as new discoveries in the hydrocarbons sector or technological progress. however, this factor was closely followed by the view that an increase from foreign investors will drive M&a acquisitions, which 29% of respondents assessed as being the most prominent driver. an executive director from south africa says: “M&a in africa is driven by foreign buyers. countries like china, india, the Us and many European countries have invested heavily and their motive is to seek abundant natural resources in order to meet their industrial demand. african resources are some of the best quality and give investors good value for money, so cash rich companies are taking advantage of the opportunities in africa to build assets.”

Turning to sell-side drivers of M&a activity, the majority of respondents (39%) identified a refocusing on core areas as being the most prominent driver, followed by funding expansion into more profitable business areas (22%). This view reflects a shift that has taken place in the M&a environment in recent years, where it is not so much a question of aggressive buyers looking to hoover up assets, but, rather, sellers looking to raise capital or secure their capital structure. according to a legal adviser from south africa: “diversification is a key reason for the increase in M&a activity from buyers, but at the same time many companies are looking to sell their non-core business since they are seeing many opportunities in their core business areas and they want to focus on those. similarly, even in the case of private equity investors, divestments from PE firms will contribute to the increase in M&a.”

what do you think will be the greatest buy-side drivers of M&A acquisitions in the year ahead?

0% 10% 20% 30% 40% 50% 60% 70%

Undervalued targets

African companiesexpanding internationally

Private equity buyouts

Cash richcorporate acquirers

Subsiding market volatility

Consolidation inovercrowded markets

Increasing interest fromforeign investors

Supply-side developmentse.g. new oil/gas discoveries,

technological progress

30% 21% 13%

29% 15%18%

14% 13% 16%

17%11% 14%

11% 12%7%

4% 7% 11%

3% 3%4%

2%13% 12%


Most prominent second most prominent Third most prominent

what do you think will be the greatest sell-side drivers of M&A acquisitions in the year ahead?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Distress driven M&A

Valuations at topof the curve

Private equity divestments

African companiesacquiring the non-core

assets of foreign companies

Funding expansion inmore profitablebusiness areas

Refocusing on core areas 39% 12% 20%

22% 17%20%

16%11% 18%

24% 15%10%

19% 14%9%

17%9% 7%




12

although progress has been made in recent years, there remain certain obstacles (often associated with developing economies) for investors into the region to overcome. Three areas stand out in the survey: almost a third of respondents view political risks as the biggest obstacle, followed by regulatory issues (25%) and economic uncertainty (21%). a finance director in Zimbabwe explains: “investments in africa are naturally attached with concerns regarding corruption and political instability and investors still fear investing in africa due to weak regulatory frameworks. but it is the uncertainty over the financial crisis that is also holding back M&a activity in africa.”

north africa has experienced well-documented political upheavals in recent quarters, but respondents were unequivocal in their view that the effect of social unrest in north africa on M&a activity in the wider region is diminishing. of those polled, 92% believe that M&a activity is recovering and 6% say that M&a in the region has not been affected at all. Meanwhile, just 2% assess that M&a remains stalled. a finance director in Madagascar says: “social unrest in north africa did not overshadow M&a activity in the rest of africa. neither central nor south africa witnessed any cancellation of ongoing deals or announced deals due to the social crises in north africa. The social or political conditions in south and central africa are stable and are favourable for dealmaking.”

“i think the effects of social unrest in north africa were restricted to that region, with southern and central africa only affected mildly, if at all.” Financial Adviser, Egypt

what do you believe will be the principal obstacles to M&A activity over the next 12 months?

0% 10% 20% 30% 40% 50% 60% 70%

Cultural differences

No obstacles

Financing difficulties

Transparency concerns

Vendor/acquirerprice dislocation

Economic uncertainty

Regulatory issues

Political risks 31% 18% 9%

25% 14%20%

21% 18% 14%

20%9% 14%

14% 17%9%

3%5% 12%

1% 1%

8% 1%8%

In relation to recent and ongoing social unrest in North Africa, how well do you feel M&A in Central and Southern Africa as a whole is recovering?

49%

6%

43%

2%

recovering well

recovering gradually

M&a in central & southern africa was not seriously impacted by the unrest in north africa

remains stalled

biggest obstacle second biggest obstacle Third biggest obstacle


13


Growing regional integration, greater economic power and a good understanding of local markets means that intra-regional M&a activity is increasingly dominant in africa and over 90% of respondents expect a rise in cross-border M&a activity in the coming year. according to a managing director in Tunisia: “africa remains a relatively untapped market with the potential to absorb more goods and services. This means it is a great source of revenue and growth for african companies. by expanding operations in different countries in the region, african companies can capitalise on increased globalisation and rapid technological development.“ or, as an executive director from south africa puts it: “african companies are more comfortable in expanding within africa than looking to expand outside africa. investors based in africa understand the african investment culture and they can judge the opportunities in africa well.”

“african companies are now targeting other african countries for growth. Many african countries are growing at a fast rate and thus the african companies easily find attractive opportunities for their revenue growth.” Head of Finance, Kenya

as the region’s biggest and most sophisticated economy (and with the iMf forecasting GdP growth averaging 3.0% over 2012-2013), south africa stands out as the country which nearly two in three respondents see as the most active cross-border acquirer over the coming year. south africa is followed by the region’s second biggest economy, nigeria (where the iMf forecasts GdP growth averaging 7.4% over 2012-13) and kenya (where the iMf forecasts GdP expansion of 5.5%). according to another south african director: ”south africa still remains the biggest and most diversified economy in africa. it has many cash-rich companies and wealthy financial investors who are not waiting on the sidelines to see what international investors will do in africa and instead are proactively investing aggressively in africa. nigerian companies are fast catching up and are also very aggressive in M&a activity in order to expand their operations in developing countries.”

“south africa is at the heart of M&a deals in africa and has the biggest appetite for M&a. south african investors have a global view and are constantly looking for growth opportunities in africa through inorganic means.” Legal Adviser, South Africa

Most active second most active Third most active

CROSS-bORDER INSIGHTS

which African country will be the most active cross-border acquirer over the next 12 months?

Do you expect cross-border dealmaking (i.e. between different African counties) to increase in the next 12 months?

91%

9%

Yes

no

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cameroon

Ethiopia

Ghana

Tanzania

Zambia

Other

Angola

Kenya

Nigeria

South Africa 64% 22% 6%

30% 25% 14%

22%19%

10% 14%

7% 7%

5% 11%

5% 10%

5% 1%

7%

4%

1%

5% 1%

5% 2%5%



14

99%

1%

Yes

no

(a) Do you expect inbound acquisitions to Africa from bidders outside of the region to increase in the next 12 months?

(b) From which global region do you expect most buyers to come?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Latin America

Middle East

North America

Europe

Asia-Pacific 65% 14% 16% 5%

18% 22% 20% 22% 17%

32% 8% 1%18% 41%

14% 27% 55%

4%

21% 34% 25%21%


fourth most prominent fifth most prominent


opinion was almost unanimously positive regarding whether M&a acquisitions into africa from outside the region are on the increase, with 99% of respondents expecting a rise in dealmaking. a managing director from Ghana states: ”africa cannot be ignored anymore; it is now a primary business region which has abundant natural resources, a growing market, a large, skilled workforce and an improving political and regulatory environment. inbound acquisition will increase greatly in the next 12 months and companies from outside africa which need growth will not be deterred by any issues if they see an opportunity for growth.“

Meanwhile, the head of strategic development at a botswanan firm puts it like this: “we expect inbound acquisitions to increase significantly as more overseas groups target africa's fast-growing economies. africa is becoming much more important for a lot of global companies and thus we will see an increase in competition. also, africa’s population has crossed the billion mark and companies from Europe and north america are keen to tap the sustainable growth opportunities present in africa.”

“international investors will target africa like never before. There is a lot of positivity in africa thanks to improved socio-economic conditions, high growth rates and healthy investment returns.” Legal Adviser, South Africa

interestingly, nearly two thirds of respondents saw asia-Pacific as the most prominent region for acquirers, while 18% thought that Europe would be the most prominent source of acquisitions, and another 18% cited north america. however, north america came well ahead of Europe among respondents who assessed it as the second (41%) or third (32%) most important source of M&a activity. These views reflect the remarkable growth in chinese investment into the region in recent years, which is expected to rise further as global economic power shifts eastwards in the wake of recent global economic crises and as Europe and north america post low growth rates (the iMf forecasts GdP growth of just 0.2% for the Euro area over 2012-13 and 2.2% for the Us), while china continues to boom (the iMf forecasts GdP expansion averaging 8.3% over 2012-2013).

a managing director in Egypt explains: “china, russia and india are the new top investors in africa and they are not just focused on natural resources. Their interest is diverse and they see africa as a very important end market for their products. Trade between china and india with africa has now exceeded that of any other region and they are buying every opportunity in africa.” a director of a private equity firm in Zambia agrees: “china is a rapidly growing market and in africa it has found huge demand for an export market to receive its finished goods, as well as a reliable import market which can provide it with regular supply of natural resources. africa is the ideal M&a partner, with its attractive consumer market and significant natural resources.”

15


83%

17% increase

stay the same

Approximately what change do you expect to see in terms of foreign investment over the next 12 months?

(c) In which of the following sectors do you expect the bulk of this increase to take place?


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Business Services


Leisure

Financial Services

Transportation

Construction

Industrials

TMT

Consumer

Energy, Mining& Utilities 72% 13% 8%

13% 26% 22%

14%8%

18% 19%

11% 2%14%

9% 6%

4% 1%

7%

14%

3%

1%

1%

1%

5% 1%

7%5%


for investors from outside the region, the energy, mining & utilities sector is assessed by respondents as accounting for the bulk of the increase, with 72% seeing this sector as the most active, followed by consumer (13%). interestingly, when compared to the earlier question regarding overall sectoral activity, respondents have afforded a higher percentage to activity in the sector in this question, which focuses on foreign investment, reflecting how important africa’s natural resources are for growth outside the region.

as a corporate director in cameroon says: “Mining and energy assets are core interests for foreign investors in africa. but at the same time, as africa develops and emerges as an economic powerhouse, there is a greater need to revamp the below-potential consumer sector and weak infrastructure. in these areas foreign investors have the upper hand because of their superior technology and they exploit this abundant opportunity for growth.” a finance director in Morocco agrees with this view, but adds: “financial investors are diversifying their investments where financial services and telecommunications in particular have emerged as vibrant sectors for investment in recent years and will continue to attract investors behind the energy and mining sector.”

in terms of wider foreign investment into the region, again respondents are upbeat and do not see the current challenging global economic environment as a significant obstacle to M&a activity in africa. accordingly, 83% expect a rise over the next 12 months, while 17% expect it to stay at the same level. no respondents expect fdi to drop. according to a head of finance based in botswana: “This is the right time for foreign investors to enter african markets. currently the valuations are low and the market is just starting to recover. foreign investors know this is a crucial opportunity.”

some respondents commented on the different challenges affecting african versus non-african investors. Many respondents comment that african governments are not always eager to facilitate inbound investments, including a south african respondent who reports that “there is greater government scrutiny as to whether the deals done by the non-african businesses will benefit the economy or not.” There are also cultural forces at play, says a Morocco-based respondent: “african businesses are used to the business environment, which is vastly different from other regions. it is hard to explain, but it is very different and any new company from outside africa will find it difficult to understand the structure of the business system in africa. in particular, there is a threat from corruption, which african business use in their favour.”


16

15%

12%

41%

25%

7%

54%

46%

by 30% or more

by 25%

by 20%

by 15%

by 10%

Yes

no

If increase, approximately what change do you expect to see in terms of foreign investment over the next 12 months?

(a) Do you expect outbound African dealmaking to increase in the next 12 months?

nonetheless, respondents have taken the current challenging economic environment into account in their view and though foreign investment is expected to rise, it is by a lower figure than has been the case in some recent years. The majority of respondents (41%) expect foreign investment to rise by 20%, while 22% expect it to rise at a higher rate. Meanwhile, 37% expect fdi to rise by 10-15%.

Traditionally, africa has been a net recipient of investment rather than an aggressive outbound investor, and will likely remain so for the foreseeable future. respondents’ opinions are mixed (being split almost equally in half) on whether outbound african dealmaking will increase over the coming year.

Those who do expect increased outbound activity say that south africa and nigeria will lead the way on this. one respondent, a cEo based in Ghana, says: “south african companies are going global and reaching out to new customers in different markets. south africa also has very cordial business relations with many major economies and these improved trade relations are helping south african companies to clear all the hurdles.”

17


16%

29%

55%

increase greatly

increase

remain the same

(a) what do you expect to happen to the level of private equity buyouts in Africa over the next 12 months?

(b) If yes, please rank the following regions in terms of where you expect most of this activity to be directed

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

North America

Europe

Asia-Pacific 43% 26% 30%

41%30% 28%

27% 27%46%



in a mirror of respondents’ views on the origin of inbound investment to africa, when considering outbound investment from the region, the majority of respondents (43%) expect asia-Pacific to be the most active region, followed by Europe (30%) and north america (27%).

respondents are upbeat regarding private equity buyouts over the coming 12 months. no respondents expect a decrease in activity, while nearly three-quarters expect an increase. a financial adviser in chad explains: “africa is a potentially enormous market, with diverse investment opportunities. PE investors are ready to take the risk and this will further widen their opportunities. with a little caution and by choosing the appropriate structure for their investments, PE firms will be able to draw high returns both in the short and long term.”

an executive in botswana goes into more detail on this trend: “regardless of the region, private equity buying activity in africa is increasing at a high rate. PE investors in africa have developed a new strategy where they first pool funds together to take very large public companies private and then try to improve the financial results and prospects of the company with the hope of reselling the company to another firm or exiting through an iPo which provides them high returns.”


18

5%

23%

72%

51%

33%

16% increase greatly

increase

remain the same

Even mixture of both

international

local

(b) And what about the number of exits? (c) Do you expect the majority of private equity activity during this period to come from local or international private equity firms?

Just over three quarters of respondents expect an increase in private equity exits over the coming year, while 23% expect activity to remain at the same level. This increase is being driven by favourable valuations in the region; as a managing partner at a legal advisory firm in liberia explains: “as portfolios are yielding better valuations, PE firms are beginning to exit their portfolios through the secondary market and i expect this activity to increase.”

The optimistic outlook for africa’s exit environment is a sharp contrast to Europe, where the climate for private equity exits has been plagued by buyer-seller valuation gaps and lingering economic uncertainty. in africa, a positive exit market also reflects the fact that private equity targets tend to be smaller, fast-growing companies, says a south africa-based investment banker: “both domestic and international PE firms are confident of investing in africa. They can build a growth fund and invest in emerging companies, which are growing fast and have a clear strategy. PE firms are very careful in choosing their portfolio and they structure their investment in such a manner that they have the complete control on the company and its governance.”

around half of respondents expect an even split between local and international private equity firms, while a third of respondents expect international private equity firms to account for most activity. whichever the case, competition between african and international private equity firms is hotting up. as a managing director in senegal says: “i think the competition will be intense. domestic PE firms also have a good capital backup and now they will give tough competition to international PE firms.” a south african director echoes that sentiment: “domestic private equity firms have become very active and are competing hard against the international PE firms. domestic PE firms have many advantages and government support which helps them in seizing the opportunity they wish for.”

19


what in your view are the key obstacles facing private equity investors?

In which sectors do you expect to see most private equity activity over the next 12 months?

with a similar result to the question regarding obstacles to overall M&a activity, when asked about the obstacles facing private equity firms, 32% view regulatory hurdles as the most prominent obstacle, closely followed by resistance to handing over substantial management control, which 28% believe to be the most prominent obstacle.

Meanwhile, a quarter of respondents believe that competition from corporates is the most prominent obstacle. a south african director also reports that private equity can have an image problem, resulting in increased regulatory scrutiny for deals: “There is a perception that PE investment does not really lead to improvement in the economy and infrastructure, and that PE investors invest in africa only on a short basis and do not do much for the development of community. accordingly, PE investments are scrutinised heavily and face many regulatory hurdles.”

in terms of sectoral distribution of investments, private equity mirrors wider M&a and investment trends and the majority of respondents – nearly half – see most private equity activity taking place in the energy, mining & utilities sector, followed by consumer, which 21% of respondents see as the most active sector. This is followed by industrials (10%), TMT (9%), construction (6%) and financial services (6%).

The consumer sector warrants closer analysis, as this is one area where international businesses with weak growth at home can find access to new customers and distribution channels. an Ethiopia-based cEo is just one of many respondents who draws attention to this trend, stating: “The rate at which the middle class in africa is growing has caught the attention of international investors and the trend of M&a activity growth in africa will continue. as the middle class in africa expands, we will see consumer demand rise, attracting a range of global businesses looking to take advantage of this.”

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Lack of viableexit opportunities

Other

Access to capital

Lack ofattractive targets

Competition fromcorporates

Resistance to handingover substantial

management control

Regulatory hurdles 32% 21% 28% 7%12%

28% 21% 22% 11% 6% 12%

25% 11%19% 17% 10%17%

21% 11%8% 25%15% 20%

15% 21%

100%

29%

21% 27% 47%

11%18%

1% 1%

3%

5%

Most prominent Very prominent Prominent

not very prominent not prominent least prominent


Most activity second most activity Third most activity

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Business Services


Leisure

Transportation

Other

Financial Services

Construction

TMT

Industrials

Consumer

Energy, Mining& Utilities

45% 24% 14%

21% 17% 18%

10% 12%15%

9% 14% 13%

11%6% 8%

6% 12%6%

2%

1%6% 3%

3%6%

7%

4%

1%



20

when selecting a financial adviser for a transaction in Africa, what are the key factors you would consider?

when selecting a legal adviser for a transaction in Africa, what are the key factors you would consider?

M&A ADVISORy ExPERIENCE

when it comes to selecting a financial adviser, almost half of respondents consider that local market experience or expertise is the most important factor. This is followed by the ability to provide financing (18%), and sector experience (15%). at the other end of the scale, 31% assess that local relationships are the least important factor, while 30% view league table rankings or awards as the least important factor.

Turning to legal advice, as with financial advice, the majority of respondents (39%) assess that local market experience or expertise is the most important factor. This is followed by depth of experience or expertise, which a quarter of respondents view as the most important factor and local relationships and sector experience, each with a 15% share. Meanwhile, in terms of factors considered the least important, league table ranking gained a 33% share and international reach a 34% share.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

League tableranking/awards

Local reputation

Local relationships

Sector experience/expertise

Ability to provide financing

Local marketexperience/expertise 45% 23% 20%

3%

10%

18% 23% 14% 11% 13% 22%

15% 23% 21% 8%31%

10% 9% 11% 15% 24%

15%16%14%10% 30% 14%

10%

21%

27%8% 30%23%

31%

3%

3%

Most important Very important important

not very important not important least important


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

League tableranking/awards

International reach

Local reputation

Sector experience/expertise

Local relationships

Depth and breadth ofexperience/expertise

Local marketexperience/expertise

39% 26% 23% 1%9%

25% 20% 20% 21% 10%

15% 14%13% 19% 11%19%9%

28% 16%15% 10%21% 10%

15% 9%9%

33% 18% 34%13%

18%

18%13%6%5% 24% 33%

22%24%

1%

3%

4%

4%

1%

1%

Most important second most important Third most important

fourth most important fifth most important sixth most important

seventh most important


21


when you use a legal adviser directly or indirectly in African countries apart from South Africa, are they usually:

If "Local, African": would you employ a foreign legal adviser in the future for transactions in Africa?

36%

58%

6%

38%

62%

a combination of both local and foreign

local, african

foreign, non-african

Yes

no

The majority of respondents (58%) use a foreign, non-african legal adviser when dealing with african countries (apart from south africa), followed by 36% who use a combination of both local and foreign legal advice. only 6% said they would use only local, african legal advice. Many respondents cite that their choice of adviser would vary on a deal-by-deal basis and that it would depend on the transaction.

of the respondents that use only local, african legal advice, 62% say that they would not use a foreign legal adviser in the future, though 38% say that they would use a foreign legal adviser in the future. among those who said they would use a foreign legal adviser in the future, a nigerian cfo reports: “domestic advisers are not always aware of international adviser standards and cannot be used for international deals. Meanwhile, a Ghanaian cEo explains: “if we make an acquisition of assets of a foreign company or enter into a joint venture with a foreign company, then we will certainly employ a foreign legal adviser who has the expertise on the country where the foreign company is based.”

“international advisers are standard and well-reputed and i think their services are of a very high quality.” Director of Development, botswana


22

If "Foreign, non-African": would you employ a local legal adviser in the future for transactions in Africa?

Do you find that the advice you receive is:

60%

40%

65%

1%

34%

Yes

no

adequate

Excellent

reasonable

for those respondents who only use foreign legal advice, the majority, 60%, say they would use a local legal adviser in future transactions. when asked to state the country in which their usual legal adviser is based, south africa is the most common location followed by other major economies including nigeria, kenya, Egypt and Morocco.

The majority of respondents (65%) believe that the legal advice they receive is adequate, while just over a third of respondents assess the advice they receive as excellent.

23


what do you feel is the principal legal challenge in doing deals in Africa?

36%

40%

20%

3% 1%

Transparency concerns

regulatory issues

Political risks

cultural differences

no obstacles

The majority of respondents (40%) view transparency concerns as the principal legal challenge for doing deals in africa. This is followed by just over one third, who believe that regulatory issues are the main challenge and 20% who view political risks as the main challenge.


24 FEATuRE

25


INbOuND M&A IN AFRICA

overseas M&a investment into africa plays a key role in the region’s overall deal market and inbound transactions from non-african bidders accounted for around 45% and 65% of african M&a deal volume and value this year. in the context of the current economic outlook, M&a inflows to the region are still robust and maintaining relatively high levels of activity.

There is no denying that economic uncertainty in Europe and north america has made investors more risk-averse in their approach to M&a, but at the same time companies in these regions are hoping to offset weakness at home by seeking acquisitions in faster-growing markets. in this respect, africa’s relatively high levels of growth make it an attractive prospect to foreign buyers.

More than half (53%) of all inbound M&a since 2011 has come from western European acquirers, and some of the past year’s largest deals show international consumer groups – like france-based danone sa and Uk-based diageo plc – looking to tap the growing potential of african consumers.

There are also sector-specific forces at play. investors from the asia-Pacific region have been eager to access africa’s rich natural resources, and this eagerness is partly reflected in the fact that asia-Pacific acquirers account for 23% of inbound M&a in volume and 27% in value since 2011.

shabbir norath, head of corporate finance at nedbank capital, notes that many acquirers have been drawn to the minerals sector, where high commodity prices are boosting profitability: “africa is well known for its mining resources and we’ve been seeing quite a bit of activity on the mining side. firms are looking for prospecting rights or mining opportunities across the continent.” The data certainly support this view, with four out of the top ten deals of the last 12 months involving energy and mining companies.

despite the unquestionable growth opportunities, there are a number of questions on potential investors’ minds. what will be the ease of doing business in africa? how stable is the jurisdiction and do the institutions of state function as they should – and crucially, if you need to enforce a judgement in that jurisdiction from overseas, will you be able to do so? finally, is the government serious about fighting corruption?

it is in these areas of governance that investors have reported huge improvements in recent years, with governments working hard to improve the commercial environment. désiré kamanzi, head of Ens rwanda, cites the example of rwanda: “after its recent very difficult history and in a short space of time, rwanda has created one of the most stable and easy environments for doing business in africa.”

in terms of sectors, two distinct trends stand out for yield flows. first, upstream, natural resources and commodities opportunities continue to be lucrative for chinese and indian firms looking to lock down long-term supplies of resources to feed rising demand.

Meanwhile, Middle Eastern investors are also thinking long-term in their approach to agriculture investments, says norath: “investors from the Middle East are planning ten years down the line when they expect food prices to increase, so they are looking for food security through agriculture assets in jurisdictions like sudan, Ethiopia, somalia.”

but perhaps even more interesting than the ever-busy natural resources and commodities industry is the consumer sector, where the burgeoning middle classes have made africa a key destination for overseas buyers – a point that is frequently made by respondents in the M&a survey and is backed up by the data. in 2011, the consumer sector accounted for 13% of overall deal value (making it the second largest sector) and one of the year’s top ten deals, with danone of france’s Us$686m purchase of a 38% stake in Morocco’s centrale laitiere.

as with other emerging markets, there is also huge potential in infrastructure and telecommunications. scott nelson, department head of Ens africa explains: “The potential for infrastructure in africa is obvious. and if you’re looking at countries which are having 6-8% GdP growth, albeit from a low base, with infrastructure that’s around 10-12% of what the country actually needs, it’s quite mind-boggling what can be achieved.”

as far as telecom is concerned, the biggest deal of the last 12 months was france Telecom’s Us$3.3bn acquisition of a 64% stake in the mobile division of an Egyptian carrier.

from a regional perspective, african M&a is dominated by a list of regional hubs including nigeria, kenya, and south africa. “These will continue to be the most important markets for M&a,” says norath, who adds that angola is another market where there is a lot of focus right now.

norath also highlights the significance of south africa as a portal for accessing other regions. “south african companies provide relative ease of access for investors onto the Johannesburg

“last year, of the 10 fastest growing economies in the world, seven of them were african. as the middle class in africa expands, we expect to see consumer demand rise, attracting a range of global businesses looking to take advantage of this. as a result, people are very attentive to opportunities in africa.” Piet Faber, ENS Chief Executive

26


num

ber

of d

eals

0

5

10

15

20

25

30

35

40

Q1-Q312

Q1-Q411

Q1-Q410

Q1-Q409

Q1-Q408

Q1-Q407

Q1-Q406

Q1-Q405

0

5,000

10,000

15,000

20,000

25,000

30,000

Value of deals Us$m

inbound M&A to AFricA trends

number of deals Value of deals Us$m

securities Exchange and firms find it easy to access the continent through south african entities. a good example is a company like shoprite holdings, which is now growing across the continent. This model allows companies to invest in a highly regulated exchange while getting access to the rest of africa. and this is the reason why you’re seeing a significant number of south african entities investing across the continent,” he says.

regardless of sector or territory, africa-bound investors will ultimately have to keep in mind that africa is a diverse M&a market that cannot be approached in a uniform way.

“People often talk of africa as a single market but you have to appreciate that each individual market is nuanced. lumping them together is a mistake,” says norath.

foreign investors also need to be sensitive to cultural issues. in africa, a lot of deals are sourced through relationships, so having strong personal ties in africa may be more important than in developed markets.

at the same time, investors should be ready to encounter some internal resistance to foreign investors, says norath.

“a number of these companies have grown themselves independently, they’re significant players and so they don’t want to be dictated by an offshore shareholder. so any company wanting to come into the african market has to bear that in mind. These are successful companies in their own right and forging a successful relationship is important in order to close a deal.”

“People often talk of africa as a single market but you have to appreciate that each individual market is nuanced. lumping them together is a mistake.” Shabbir Norath, Head of Corporate Finance, Nedbank Capital

27


inbound vAlue split by bidder regioninbound voluMe split by bidder region

57%27%

14%

2%

47%

28%

10%

12%1 2

53%

23%

16%

6% 2%

51%

20%

13%

13%2 1

2011-2012 YTd 2005-20102011-2012 YTd 2005-2010

western Europe

asia-Pacific

north africa

Middle East

central & Eastern Europe

latin america

western Europe

asia-Pacific

north africa

Middle East

central & Eastern Europe

latin america

Announced Date

Status Target Company Target Sector Target Country

bidder Company bidder Country

Seller Company Seller Country

Deal Value

uS$m

apr-12 c Egyptian company for Mobile services (63.64% stake)

Telecommunications: carriers

Egypt france Telecom sa france orascom Telecom Media and Technology holding saE

Egypt 3,281

Jan-12 c first Quantum Minerals (kolwezi Tailings project, frontier and lonshi mines and related exploration interests)

Mining congo, the democratic republic of

Eurasian natural resources corporation plc

United kingdom

first Quantum Minerals ltd

canada 1,250

Jun-12 P centrale laitiere (37.8% stake)

consumer: foods Morocco danone sa france societe nationale d'investissement sa

Morocco 686

Jul-12 P Minas de revuboe (58.9% stake)

Mining Mozambique anglo american plc United kingdom

Talbots Estate agents United kingdom

555

Mar-12 c optimum coal holdings ltd (32.23% stake)

Mining south africa Glencore international plc

switzerland 414

May-12 P EfG hermes holding saE (brokerage, research, asset Management, investment banking and infrastructure fund businesses) (60% stake)

financial services Egypt Qinvest llc Qatar EfG-hermes holding saE

Egypt 250

Jan-12 c Meta abo brewery consumer: other Ethiopia diageo plc United kingdom

Government of Ethiopia

Ethiopia 225

feb-12 c Titanium holding company sa

consumer: foods nigeria olam international ltd

singapore 167

Mar-12 c saham finances (Undisclosed stake)

financial services Morocco abraaj capital holdings ltd

United arab Emirates

Group saham Morocco 127

feb-12 c dashen brewery share company ltd (41% stake)

consumer: other Ethiopia duet Group United kingdom

Tiret Endowment investment organization

Ethiopia 118

c = complete; P = Pending

top 10 inbound M&A deAls, 2012 ytd


28 FEATuRE

29


looking at the trends of private equity transactions compared with overall M&a activity, there are a number of characteristics that set PE deals apart. Most notably, deals are much smaller. This can be seen from a glance at the top ten PE deals of the year, where the biggest deal was for Us$131m (compared with the top overall M&a deal of Us$3.3bn).

in part, this reflects the sort of sectors that PE funds prefer to invest in, since they are less interested in energy and mining, which tend to be capital intensive. financial buyers want to invest in areas that are expanding – for example, middle-market businesses that promise high returns – rather than areas like natural resources which, by their very nature, are diminishing.

“PE funds are very much looking at longer-term investments that will benefit from the expanding middle class, which is hugely underserved by vital key functions. That creates a significant market opportunity and is less risky, both from a capital risk and political risk perspective, compared with mineral investments.” indeed, one of the year’s biggest PE deals was duet Group’s Us$118m acquisition of a 41% share in Ethiopia’s dashen brewery.

another important element of the private equity landscape is scalability – PE investors are more likely to focus on growing a business into new regions rather than sticking to a single jurisdiction. as nelson of Ens explains, “single country deals for PE investors can be too risky, with over exposure to one economy potentially presenting an unacceptable level of country concentration risk. The key to getting good returns in africa is what is often referred to as a platform approach, which depends on building a scalable business that you can expand across a continent. This spreads the risk so that if one of the 10-15 countries you’ve invested in goes down, you’re not going to lose your whole investment.”

looking at how PE investments have changed in the region, norath of nedbank capital notes greater activity beyond south africa, as well as south african PE funds themselves increasing their risk appetite and investing across the continent. however, the ability to manage investments in multiple jurisdictions is challenging, and means that PE investment execution can be a long and complex process.

nelson elaborates on this point, explaining that investing across africa can also require a great deal of time, resources and flexibility: “deal cycles are long and investing in multiple jurisdictions means that due diligence throws up a plethora of issues, all of which need to be solved. as a result, there is an opportunity cost since deal execution is not rapid and depending on a firm’s resources, it can be difficult to do more than a couple of deals a year. This is a big challenge. You have to physically get in there and find out the details, because often that is the only way to access the information you need.”

another challenge to PE investors is the sheer availability of

opportunities. There are fewer lbos in africa, and the larger funds are so plugged into the market that they tend to snap up deals too quickly for other firms to compete. as nelson explains, the scarcity of transactions has left a lot of funds sitting on dry powder: “The funds want Us$200m deals, but they’re just not there, so funds that like to do big, chunky deals will have to change their approach.”

overall, PE investors have to tailor their strategies to the unique make-up of the african business environment. as nelson explains, “one of my clients puts it like this: african capital needs to be patient capital.”

norath echoes this sentiment while also pointing out that investors looking for opportunities in africa often have to be proactive and creative. “we recently met someone who amalgamated 15 different transport companies in the region to create a logistics company, which was then sold to an acquirer at a good profit. Each company had been owned by a family or a small business; each had a very different corporate governance. The point is that you can’t wait for traditional PE opportunities, because they just won’t happen. You have to go create an opportunity. That’s the mindset PE investors should have coming to the continent.”

PRIVATE EquITy IN AFRICA

“The continent is seen as a sleeping giant and it is waking up as some global markets stall. south africa is the natural gateway into africa because of, among other things, its first world banking system, legislation and financial infrastructure.” Mzi Mgudlwa, ENS Deputy Chief Executive

“PE investors looking for opportunities in africa often have to be proactive and creative.” Shabbir Norath, Head of Corporate Finance, Nedbank Capital

30

DEAL DRIVERS – AFRICA in associaTion wiTh Ens and nEdbank caPiTaldEal driVErs – AFRICA

num

ber

of d

eals

num

ber

of d

eals

num

ber

of d

eals

0

2

4

6

8

10

12

Q1-Q312

Q1-Q411

Q1-Q410

Q1-Q409

Q1-Q408

Q1-Q407

Q1-Q406

Q1-Q405

0

1,000

2,000

3,000

4,000

5,000

6,000

0

1

2

3

4

5

6

7

Q1-Q312

Q1-Q411

Q1-Q410

Q1-Q409

Q1-Q408

Q1-Q407

Q1-Q406

Q1-Q405

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Value of deals Us$m

Value of deals Us$m

Value of deals Us$m

AFricAn privAte equity exit trends

number of deals Value of deals Us$m number of deals Value of deals Us$m number of deals Value of deals Us$m

Announced Date

Status Target Company Target Sector Target Country

bidder Company bidder Country

Seller Company

Seller Country

Deal Type

Deal Value

uS$m

Jul-12 P Pretoria Portland cement company limited (6.28% stake)

construction south africa nozala investments (Pty) ltd; Peu Group (Proprietary) limited; ilima Portland consortium (Proprietary) limited; Palama cement consortium; bafati investment Trust; Pretoria Portland cement company limited (Ebo vehicle)

south africa Ebo 131

Mar-12 c saham finances (Undisclosed stake)

financial services

Morocco abraaj capital holdings limited

United arab Emirates

Group saham Morocco ibi 127

feb-12 c dashen brewery share company ltd (41% stake)

consumer: other

Ethiopia duet Group United kingdom

Tiret Endowment investment organization

Ethiopia ibi 118

Jan-12 c kevro (72% stake) services: other south africa Ethos Private Equity ltd south africa ibo 109

Jun-12 c UaP holdings limited (40% stake)

financial services

kenya swedfund international ab; aureos capital limited; Tuninvest

United kingdom

ibi 55

apr-12 c spring lights Gas (Pty) limited (51% stake)

Utilities: other south africa Zungu investments company (Pty) ltd; kwande Group (Pty) ltd

south africa ibi 46

feb-12 c duro Pressings (Pty) ltd construction south africa capitalworks south africa Mbo 39

feb-12 P dynamic fibre Moulding (Pty) ltd

Manufacturing: other

south africa horizon Equity south africa ibo 24

Mar-12 P chayton atlas investments (81% stake)

agriculture Zambia abraaj capital holdings ltd south africa chayton capital llP

United kingdom

Exit 10

Mar-12 P beltone securities (51% stake)

financial services

Egypt duet Group Egypt beltone financial

Egypt ibi 7

c = complete; P = Pending

top 10 privAte equity deAls, 2012 ytd

AFricAn privAte equity buyout trends

31


32


AbOuT ENS & CONTACTS

why choose us

Ens (Edward nathan sonnenbergs) is africa’s largest law firm advising clients throughout africa across all areas of corporate business relating to law, tax, forensics and iP. The firm benchmarks itself according to international standards whilst retaining a uniquely african focus, making it well-equipped to advise clients wherever they may choose to do business. Ens currently has over 500 practitioners and was established over 100 years ago, making it one of the oldest and most experienced full service law firms in africa. The firm has been recognised for its contribution to broad-based black Economic Empowerment (bbbEE) in south africa and is proud to be a level 3 bbbEE contributor.

one firm | one team

The key to the firm’s success and its differentiator in the market is its ‘one-firm and one-team’ approach. instead of practitioners doing client work across a variety of areas, Ens has specialised teams comprising a number of practitioners who only do work in a particular area of law. as a result of this focus, the firm has high levels of expertise experience and in a multitude of business areas and industry sectors.

it is the integration of these numerous skill sets as one cohesive team that allows Ens to provide clients with a turn-key and cost effective solution. irrespective of how many business areas a transaction spans, work is done not only at the right level, but also by the person best able to do the transaction, meaning that clients can benefit from fast turnaround times, access to the right advice and the most affordable solution.

“Ens has been commended for its great technical knowledge and brilliant turnaround times," (chambers and Partners Global Guide 2012)

in Africa | for Africa

Ens is uniquely placed to understand and leverage off its knowledge of the local markets and has amassed experience in dealing with the diverse regulatory bodies across africa. The firm is proud of its in-depth experience in managing and executing large pan-african legal projects, transactions and engagements.

with a number of practitioners qualified in English law, Ens has the necessary background expertise when relating to transactions being done across the anglophone countries within africa. The firm also has specialist expertise in respect of doing business in francophone africa with a number of french speaking practitioners who are also qualified in french law. Moreover, Ens has practitioners who are qualified to practice ohada law and therefore the firm is not only business-fluent in french, but it is able to transact and advise clients across all of the ohada countries.

by virtue of its position in africa, Ens is also able to advise clients in the most cost effective way by ensuring that work is done in the location and by the people best suited to each aspect of the transaction. whether working closely with a client’s trusted adviser in cross-border matters, or assisting clients directly, Ens is ideally placed to ensure that all transactions involving african countries can be optimised and managed from a local and geographic perspective, to ensure maximum return for the client.

Ens remains a leading player in the african legal market, with chambers and Partners rating the firm Ens as a recommended firm in Africa in 2012: “its commitment towards expanding its practice outside south africa is demonstrated by its recruitment of lawyers from countries including Ghana, kenya and Uganda, and the variety of deals it advises on in jurisdictions outside south africa.”

world-class

Ens is a recognised market-leader and is ranked in nine chambers areas of law (south africa), with five of the firm’s core practice groups being rated in the top tier in 2012, namely corporate/M&a, banking and finance, capital Markets, Tax and competition/anti-Trust.

The firm has been described as:

“highly experienced”, "praised for their responsiveness and thorough advice” and “on a par with top international firms.”chambers and Partners Global Guide 2012

“the competition”, “a consistent player”, and “absolutely outstanding.”iflr1000 2012

“lateral thinkers” and “exceptionally thorough and hardworking, with excellent depth of experience.”legal 500 2012

Piet Faberchief Executive [email protected] +27214102550

Michael Katz chairman [email protected] +27112697700

Mzi Mgudlwa deputy chief Executive [email protected] +27112697945

33


nedbank Group limited (‘nedbank Group’) is a bank holding company that operates as one of the four largest banking groups in south africa through its principal banking subsidiary, nedbank limited. The company’s ordinary shares have been listed on JsE limited since 1969.

nedbank Group focuses on southern africa, with the group positioned as a bank for all. The bank operates through five business clusters, namely nedbank capital, nedbank corporate, nedbank business banking, nedbank retail and nedbank wealth.

The principal services offered comprise business, corporate and retail banking, property finance, investment banking, private banking, foreign exchange, and securities trading. income is also generated from private equity, credit card issuing and processing services, custodial services, unit trust administration, insurance, asset and wealth management services.

headquartered in sandton, Johannesburg, the Group has large operational centres in durban and cape Town, complemented by a regional network as well as facilities in other southern african countries. in addition, nedbank Group has branches and representative offices in certain key global financial centres to meet the international banking requirements of the Group’s south african-based multinational clients.

nedbank Group has a market capitalisation of r88,2 billion at 30 June 2012.

AbOuT NEDbANK & CONTACTS

recognised as a leader in its field, nedbank capital is a cluster of specialist investment banking teams operating within nedbank Group. it provides seamless, specialist advice, debt and equity raising and execution, and trading capabilities to clients in all major south african business sectors. clients include the top 200 domestic corporates, parastatals, financial institutions, multinational corporates as well as major infrastructure and mining projects in africa. it is based at the Group’s head office in sandton, Johannesburg, with large operational centres in durban and cape Town, as well as offices in london, Toronto, namibia and angola.

its corporate finance team offers innovative advisory services for mergers and acquisitions, bEE transactions, capital raising (equity and debt), valuations, listings and delistings, corporate restructurings, and privatisations. The team have advised south african and multinational corporations and government institutions in south africa and the rest of africa.

in 2008, the Ecobank Group and the nedbank Group formed a banking alliance. The Ecobank nedbank alliance created an african champion banking network which proudly offers its clients access to the largest pan-african banking network spanning 35 countries with more than 2 000 branches. Through the delivery of country-specific, bespoke banking solutions across africa, the alliance effectively simplifies banking for its corporate and individual clients by making day-to-day transactional banking, financing and investment banking advisory services readily available to them.

Tapiwa ShamuPrincipal: corporate finance [email protected] +27(0)11 294 3522

Shabbir Norathhead: corporate finance [email protected] +27(0)11 294 3537

ECOBANK Footprint

NEDBANK Footprint

35 Countries

ECOBANK/NEDBANK Representative offices

ECOBANK/NEDBANK presence

NEDBANK Representative offices

The African Champion Banking Network

Together, we have Africa covered.

For further information contact: Shabbir NorathNedbank Capital Head, Corporate Finance +27 (0) 11 294 3537

email: [email protected]

Ehouman Kassi Ecobank CapitalGroup Head, Investment Banking +33 (0) 1 70 92 21 00

email: [email protected]

www.ecobanknedbankalliance.com

The African Alliance that combines local business intelligence with corporate advisory experience and expertise.

Please note that the alliance between Ecobank and Nedbank consists of a strategic business alliance agreement between the parties and does not constitute a separate enterprise. Ecobank and/or with Nedbank will therefore always act in their individual capacities when contracting with clients.

Nedbank Capital is a division of Nedbank Limited Reg No 1951/000009/06, VAT Reg No 4320116074, 135 Rivonia Road, Sandown, Sandton, 2196, South Africa. We subscribe to the Code of Banking Practice of The Banking Association South Africa and, for unresolved disputes, support resolution through the Ombudsman for Banking Services. We are an authorised financial services provider. We are a registered credit provider in terms of the National Credit Act (NCR Reg No NCRCP16).

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2012 DEAL DRIVERS africa - Mergermarket · deal volume, but by 2011, there were 20 deals in the Us$500m+ category, accounting for 10% of total volume. Meanwhile, in terms of deal