The value of mergers and acquisitions (M&As) in South Africa soared in the first half of this year, law firm Baker MacKenzie states.

The value of M&A transactions for the six months amounted to $52-billion, with 169 deals announced in the period.

Compared with the first half of 2020, transaction volumes decreased by 8%, but value increased by 958%.

This while the volume of domestic transactions in South Africa increased by 10% year-on-year to 80 deals, valued at $46.7-billion. This value is a remarkable 2148% increase on the first half of 2020, Baker MacKenzie notes.

Further, cross-border transactions increased 17% year-on-year to 89 deals, while deal value surged 251% to $5.4-billion.

High-technology companies were the primary targets for inbound deals in South Africa in the first half of the year, with 12 transactions valued at $160-million.

Commenting on this, Baker MacKenzie Africa head Wildu du Plessis says African consumers have, for a while, shown a growing reliance on technology across multiple platforms, even before Covid-19 struck.

The growth of the digital economy across the continent has naturally been accelerated by the pandemic and this unabated demand for technology has caused extensive cross-sector disruption, with the financial, energy, transport, retail, health and agricultural sectors all seeking opportunities to expand their tech infrastructure in order to acquire the necessary skills and innovation needed to keep up with demand.

Fintech is also a popular tech sector for investment across Africa and specifically in South Africa, Kenya and Nigeria, with health-tech, mobility and agri-tech also attracting growing interest.

“It looks like South Africa is leading the way in terms of high-value deals in the tech sector and we expect this tech M&A trend to continue as the continent gears up to operate in the post-pandemic new normal,” Du Plessis states.

Baker MacKenzie partner Marc Yudaken says that, despite the excellent start to the year, the recent unrest in South Africa will have impacted on the positive strides made in terms of foreign investment into the country.

“For the sake of South Africa's post-pandemic recovery, the turmoil engulfing our country has to be ended before investors are forced to seek less risky alternatives.

“Foreign investors will only ramp up their investments if they are confident their assets are safe. They need political and economic certainty and must have confidence that there is rule of law in the countries in which they invest," he notes.

Nigeria recorded 28 M&A deals in the first half of the year, amounting to $1-billion. Compared with the first half of 2020, transaction volume grew 17% and value grew by 267%.

Deals in Kenya decreased by 14% year-on-year to 18 deal, while deal value decreased by 96% to $11-million.

Du Plessis says the M&A volume decrease observed in Kenya is only temporary, as the country continues to implement pandemic-recovery policies, including a vaccine rollout strategy for the adult population with a planned completion date of mid-2022.