Investment Firms Fees Drop as M&A, Debt Capital Deals Slowdown
Investment banking firms’ earnings decline across the Sub-Saharan African countries in the first six months of the financial year 2022 due to a slowdown in transaction fees from Merger & Acquisition (M&A) and reduced debt capital issuance.
An estimated US$182.8 million worth of investment banking fees were generated in Sub-Saharan Africa (SSA) during the first half of 2022, according to data obtained from Refinitiv on Wednesday.
This translates to a 19% drop from the same period in 2021 from Merger & Acquisition deals closed, equity and debt capital raised for clients and the lowest first-half total since 2014, according to the report.
However, the breakdown of the report shows that equity capital markets underwriting fees declined 40% to US$19.2 million, the lowest first-half total in nineteen years. South Africa ranks higher as the top fees paying country while the financial service sector ranks first among the top fees paying industries.
MERGERS & ACQUISITIONS
The report reveals that the value of announced M&A transactions with any Sub-Saharan African involvement reached US$25.1 billion during the first six months of 2022.
This means 60% less than the value recorded during the same period in 2021, although Refinitiv said this is higher than the value recorded during each of the previous 10 years. The number of deals increased 4% from last year to the highest first-half total since 2017, according to the report.
EQUITY CAPITAL MARKETS
Also, SSA equity and equity-related issuance totalled US$865.6 million during the first six months of 2022, four times the value recorded during the same period last year. READ: Would Union Bank Plc settle for M&A sooner or later?
The report said all proceeds were raised by follow-on issuance with Pepkor Holdings, MTN Nigeria Communications and South African coal exporter Thungela Resources among those in the region raising new equity funds from follow-ons.
DEBT CAPITAL MARKETS
In the debt capital markets, Sub-Saharan African debt issuance totalled US$17.3 billion during the first six months of 2022, representing a 22% drop from the value recorded during the same period in 2021.
The amount is considered historically high with only 2018 and 2021 registering higher first-half totals. Meanwhile, the number of issues declined 40% from last year at this time.
South Africa was the most active issuer nation during the first half of 2022, accounting for 50% of total bond proceeds, followed by Ivory Coast (23%) and Nigeria (12%). # Investment Firms Fees Drop as M&A, Debt Capital Deals Slowdown
