Sub-Saharan Africa M&A deals, debt issuance surge in 2013

Thu Jan 16, 2014 6:22am EST

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* M&A deals jump by a third to $30.3 bln

* Most are in energy, materials sector

* Mozambique most-targeted country for M&A

* Sub-Saharan debt issuance at record high

LONDON, Jan 16 (Reuters) - The value of merger and acquisition deals targeting sub-Saharan African firms jumped by almost a third last year to $30.3 billion, while debt sales from the continent hit a record high, data from Thomson Reuters showed on Thursday.

African companies are attracting increasing investor attention due to the spending power of the rising middle class on the fast-growing continent and expansion of its natural resources sector, which is drawing investment from China and other countries.

The data showed that the most targeted M&A country by value in 2013 was Mozambique, due to three oil and gas sector deals with a total value of $9.3 billion. South Africa, Nigeria, Tanzania and Angola were also in the top five.

South Africa and China were the most acquisitive nations, together accounting for 46 percent of purchases. Indian companies were also active in buying sub-Saharan African firms.

Most M&A deals are however concentrated in the energy and materials sector, which accounted for more than $22 billion of the $30.3 billion in announced transactions, according to the data from Thomson Reuters Deals Intelligence.

On the debt front, African borrowers have also come to market to take advantage of historically low yields and strong investor appetite, with countries such as Tanzania, Ghana and Rwanda marketing successful dollar bonds in 2013.

That trend is set to continue this year, with Kenya and Ivory Coast among those planning dollar bond issues.

Sub-Saharan African debt issuance totalled $20.7 billion last year, up 66 percent from 2012, with South Africa the most active issuing country, Thomson Reuters said.

But equity and equity-linked issuance dropped 3 percent from 2012 levels, to $3.5 billion.

Investment banking fees for sub-Saharan Africa investment banking services also fell, down 2 percent to $354.5 million.

But debt capital market underwriting hit a record high of $83 million, and equity capital markets underwriting fees rose 27 percent to $90.1 million. (Reporting by Carolyn Cohn; Editing by Susan Fenton)

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