East Africa’s mergers and acquisitions market has started picking up as companies look for ways to protect their market share and ensure better returns for shareholders. Most of the M&A deals are in the financial, telecommunications, industrial and health sectors.
Analysts say the region’s changing economic fortunes over the past two years have seen struggling companies look for partners in a bid to raise new capital, create synergies and build economies of scale to tackle increasing competition.
The emerging trend has seen deal makers flock to the region to get a slice of the growing business, with an increased number of foreign corporates making major bids over the past 18 months.
According to Daniel Kuyoh, a senior investment analyst at Alpha Africa asset managers, stiff competition and a difficult operating environment have forced struggling companies to look for M&A deals to ensure they don’t close shop.
“Over the past one or two years, the valuations of most companies have become more attractive to investors,” said Mr Kuyoh.
Kenya has witnessed a number of corporate deals in the financial, telecom and dairy industry.
Last week, Kenya’s Plum Holdings, a company associated with the chairman of Equity Bank Peter Munga, announced it would acquire an additional 23.34 per cent shares in regional insurer Britam Holdings Ltd.
Private equity buyouts are expected to increase as companies look to divest in order to gather additional capital to finance larger deals.