Africa Private Capital Markets: Regional Hotspots and Business Sector Growth.
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Africa Private Capital Markets: Regional Hotspots and Business Sector Growth.
Plus Access Bank to Acquire Standard Chartered's five regional banking assets, Sovereign Debt: Nigeria, Ghana and Kenya - a case of three different halves
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Here is your weekly version of The Briefing - Essential intelligence on African financial markets, business trends and economies from Africa Finance Review. Subscribe to be notified of each new update from The Briefing.
In today’s email:
Insights: Africa Private Capital Markets: Regional Hotspots and Business Sector Growth.
Mergers and Acquisition: Nigeria’s Access Bank to Acquire Standard Chartered's five banking regional assets
Sovereign Debt: Nigeria, Ghana and Kenya - A Case of Three Different Halves
Banking Essentials: Absa Bank Kenya receives new cash injection, Société Générale Ghana records increased profit
Corporate Finance Deals Roundup: Notable Deals of The Week
Insights
Africa Private Capital Markets: Regional Hotspots and Business Sector Growth.
Not many African Conglomerates have grown to dominate their local and regional markets without engaging the public capital market for financing. Though this trend continues, the maturation of Africa’s private capital markets has grown over the last two decades, with more financing opportunities to companies at varying stages of development from start-ups to high-growth companies. This is reflected in increased deal activity across key sectors and regions.
Regional hotspots shaping up
Across the continent, investment deals have increased even with the global economic headwinds. West Africa remains the leading region with a significant inflow of private capital deals. According to the Africa Private Capital Association (AVCA), 31% of investments are concentrated in Nigeria, the largest economy in Africa with a vibrant tech ecosystem and accounting for 538 deals with a total value of $8.1 billion. The South African region had 438 deals with a total value of $5.1 billion. Interestingly, North America had fewer deal volumes but a total value of $1 billion less than the South African regional value of $4.9 billion.
Financial Services remain the central theme
Across Africa, companies are looking to challenge the status quo of incumbents and offer new services and products to a growing and demanding customer base. This is more evident in the financial services industry where largely fintech companies are offering deeper and broader financial solutions considering Africa’s highly competitive and well-capitalised banking system. The popularity of this sector is reflected in the per cent of deal volume and values compared to other sectors.
As these financial services companies look to continue to raise more private capital, their positioning and revenue are increasing. According to ‘McKinsey & Company’s ‘Fintech in Africa 2022, the revenue of African fintech is estimated to reach eight times its current value by 2025.
Mergers and Acquisition
Access Bank to Acquire Standard Chartered’s Five Regional Banking Assets.
One of Nigeria’s leading banks Access Bank has agreed to acquire Standard Chartered’s banking subsidiaries in five sub-Saharan African countries. The agreement between the two companies aligns with Standard Chartered’s plan to divest its holdings by selling its shareholding in banking assets across Angola, Cameroon, Gambia and Sierra Leone. The deal would also include the acquisition of its consumer, private & business banking operations in Tanzania.
Access Bank one of the dominant banks in Nigeria, is continuing its ambitious plan to become a leading pan-African financial services company.
Sovereign Debt
Kenya, Ghana and Nigeria: A Case of Three Different Halves.
Kenya, Ghana and Nigeria have recently experienced varying experiences around their respective sovereign loan position. Kenya secured a $500 million syndicated loan from a consortium of five international lenders with the proceeds expected to fund recently approved development projects for the Fiscal Year 2022/2023. As part of its ongoing debt restructuring plans to meet the International Monetary Fund’s loan requirements, Ghana has invited holders of its $809.9 million domestic US dollar bonds to exchange them for new lower rates and longer maturities bonds. In comparison, Nigeria has taken the rare steps for most African countries to fulfil its debt servicing obligation by paying a $500 million Eurobond on its due date of 12 July 2023.
Banking Essentials
Tanzania’s Mkombozi Commercial Bank has posted the Profit After Tax of approx. USD 208 million) for the 2022 financial year due to its transformation and repositioning strategy of the business.
Société Générale Ghana recorded a profit after tax of approximately USD 9.6 million for the year 2022 as compared to approx. USD 16 million was recorded in 2021.
Absa Bank Kenya received a capital injection of approx. USD 50 million in subordinate loan from its South Africa-based parent company
The total credit in Nigeria’s banking industry increased by approximately USD 5.9 billion a 17.40 per cent increase between the end of April 2022 and the end of April 2023, due to the adherence to the Central Bank of Nigeria (CBN)’s Loan to Deposit Ratio (LDR) directive.
Deals
M & A
Kenya’s largest supermarket chain Naivas is due to sell an extra 11 per cent stake for USD 41.7 million in a deal between the family of Peter Mukuha Kago and some foreign investors.
Bonds
Africa- focused investment company Mainbridge, through Mainbrudge Percentile Limited has issued a 10-year term $800 million Africa-related bond offering on the Frankfurt Stock Exchange.
Fundraising
Amethis the Africa-focused investment fund manager has announced the first closing of its third Pan-African Fund Amethis Fund III at €140 million. The impact investor is a member of the Edmond de Rothschild Private Equity partnership and received €40 million as equity investment from the International Finance Corporation (IFC), the investing arm of the World Bank. Amethis Fund III has a target of €450 million to provide capital to medium-sized businesses operating in industries including manufacturing, fast-moving consumer products, infrastructure, and energy across Africa.
Private Credit
Norwegian Development Finance Institution, Norfund has committed €2 million as a convertible loan to Nigerian-based recycling company Wecyclers. The investment will finance its new 12,000 tons per year PET bottle plant.
Access Bank Botswana has secured a $20 million loan from (the OPEC Fund), the financial institution and international development arm of the Organization of Petroleum Exporting Countries. The funding will be used to support micro, small and medium-sized enterprises (MSMEs) in Botswana.
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