Africa investment banking fees tumble 60 pct in Q1

LONDON, April 10 Tue Apr 10, 2012 10:40am EDT

LONDON, April 10 (Reuters) - Investment banking fees in sub-Saharan Africa fell 60 percent in the first quarter of 2012 from the previous year, as dealmaking suffered in the wake of the euro zone debt crisis, according to Thomson Reuters analysis.

Fees from regional mergers and acquisitions and equity and debt issuance totalled $71.9 million in the first three months of 2012, compared with $181 million in the same period in 2011.

It was also the slowest quarter for fees since the fourth quarter of 2009.

The slump reflected a depressed quarter for M&A activity, with $3.7 billion worth of deals targeting sub-Saharan African companies, a 39 percent drop from a year earlier.

"It's been a slow start in general globally," said Thomson Reuters deal intelligence analyst Lucille Quilter.

"Deal making has really been hindered by the fallout from the European sovereign debt crisis ... Everything really has been put on hold, in particular M&A."

Eurasia Natural Resources's $1.25 billion acquisition of First Quantum Minerals' residual assets and claims in the Democratic Republic of Congo was the biggest M&A deal in the region during the quarter.

South Africa, the continent's biggest economy, was the most targeted country for M&A, with $1.8 billion, or 47 percent of the activity, followed by Congo with 34 percent.

British and South African companies were the most acquisitive, accounting for 47 percent and 36 percent of the activity respectively.

The analysis also showed that equity issuance declined 41 percent to $1.2 billion. There were no initial public offerings from sub-Saharan African issuers.

The largest equity issue was a $585 million convertible bond from South Africa's Shoprite Invest, while follow-on activity amounted to $657 million.

Debt issuance was also subdued, with five issues totalling $3.4 billion, less than half the $7.2 billion reached in the first quarter of 2011. South Africa's $1.5 billion 12-year Eurobond, issued in January, was the largest. The other issuers were the African Development Bank and African Bank.

U.S. bank Morgan Stanley was the top overall fee earner, generating $8.4 million, a 12 percent market share, compared with its fifth place ranking last year when it had a 6 percent market share. Goldman Sachs came second with $7.2 million.

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