East Africa’s mergers and acquisitions (M&A) market has continued on its declining trend, as at the end of Q3, 2024, the total number of M&A deals had failed to reach 100.
After recording a low total number of 102 deals in the same period in 2021, according to data from DealMakers Africa, the region recorded a mere total of 77 deals valued at Sh104.53 billion ($810.06 million) during the first three quarters of 2024.
Compared to the previous years, East Africa’s M&A activity in 2024 showed a notable decline in not only the number of deals but the total deal value. According to the report, the total number of deals in the same period in 2023 stood at 123 valued at Sh174.21 billion (1.35 billion) while in 2022 they stood at 124 valued at Sh181.95 billion (1.41 billion).
In the region, Kenya continues to dominate East Africa’s M&A landscape in 2024. In fact, despite recording a decline in the total number of deals in 2024, the country recorded an increase in the total value.
Kenya recorded a total of 47 deals in the first nine months of 2024 valued at Sh67.60 billion ($523.84 million), as compared to the 71 deals, valued at Sh52.61 billion ($407.68 million) recorded in the same period in 2023. It accounts for over 64% of the region’s total deal value, with this robust activity driven by sectors such as financial services, technology, and infrastructure.
Among the total deals, private equity investments in Kenya stood at Sh16.76 billion ($129.85 million) across 25 deals, further solidifying its position as a hub for innovation and investment.
The diversity of Kenya’s PE deal activity spanned various sectors, including financial services, technology, agri-tech, and healthcare, highlighting the country’s dynamic economy and its ability to attract investments across multiple industries.
Uganda followed with Sh29.03 billion ($225 million) in total deal value from 12 deals, supported by investments in energy, agriculture, and infrastructure, with a concentration of private equity activity in the agriculture sector.
Tanzania recorded Sh7.64 billion ($59.24 million) from nine deals, with mining and tourism playing a central role in its M&A activity.
Rwanda, while smaller in scale, saw Sh9.68 million ($75,000) in disclosed deals across seven deals, reflecting its steady progress in attracting investment, particularly in technology and services.
Ethiopia, despite its vast market potential, recorded a modest Sh245.18 million ($1.9 million) in deal value from two deals, highlighting the challenges posed by regulatory and political uncertainties.
The financial services and technology sectors were the most active in East Africa, propelled by rapid digital transformation and the increasing demand for innovative financial solutions.
Fintech startups attracted significant interest from investors, capitalizing on the growing adoption of digital payment systems and mobile banking. Infrastructure and energy also played pivotal roles, with investments in renewable energy projects gaining momentum as countries prioritized sustainable development.
Additionally, the real estate sector saw increased activity, with investors targeting urban development projects to meet the rising demand for housing and commercial spaces.
Private equity investments were also a notable feature of East Africa’s M&A market in 2024, with the region recording Sh20.87 billion ($161.75 million) in PE deals across 40 transactions, led by Kenya.
PE firms were particularly active in sectors such as technology, healthcare, and consumer goods, identifying opportunities for high returns and long-term growth.
Compared to other regions in Africa, East Africa’s total number of PE deals was second only to North Africa, which recorded 51 PE deals, highlighting the region’s growing appeal to private equity investors drawn to its high-growth sectors and entrepreneurial ecosystem.
East Africa’s M&A performance was part of a broader trend across Africa, which recorded a total deal value of Sh935.55 billion ($7.25 billion) from 282 M&A deals during the first three quarters of 2024.
While East Africa’s total deal value was significantly lower than some other regions, such as West Africa’s Sh517.46 billion ($4.01 billion), the consistent growth in total deal value in countries such as Kenya and sectoral diversity, positions it as a key player in the continent’s M&A landscape.
However, there is a need for regulatory frameworks to improve and economic reforms to take hold, if East Africa is poised for greater M&A activity in the coming years.
