Sub-Saharan Africa’s investment banking has dropped to an estimated $128.2m in the first quarter of 2020, down 15% from last year’s strong start. This is according to Refinitiv’s 2020 first quarter investment banking analysis.
Advisory fees earned from completed mergers and acquisitions (M&A) transactions generated $33.5m, down 38% year-on-year, while syndicated lending fees declined 47% to $35.7m. Equity capital markets underwriting fees more than tripled to reach $36.7m, a first quarter total only exceeded twice since 2000. Bond underwriting fees increased 20% to $22.3m, again the third highest first quarter fee total since 2002
Almost one-quarter of fees in the region during the first quarter of 2020 were earned from government & agency deals. Nearly two-thirds of all fees were generated in South Africa. JP Morgan earned the most investment banking fees in the region during the first quarter of 2020, a total of $17.9m or a 13.9% share of the total fee pool.
In the M&A space, the value of announced transactions with any Sub-Saharan African involvement reached $4.8b during the first three months of 2020, 48% less than the value recorded during the same period in 2019, and a four-year low. The number of deals declined 12% over the same period. Monthly M&A declined in value for two consecutive months, with March 2020 marking the lowest monthly M&A total since August 2009. Africatel Holdings’ $1.0b sale of PT Ventures to Angolan Sonangol in January was the largest deal in the region during the first quarter of 2020.
Deals with a Sub-Saharan African target declined 74% by value to a seventeen-year low of $1.7b, as domestic M&A within the region declined 86% from last year and the combined value of inbound M&A deals failed to pass the $1 billion mark, a level achieved in all but four years since the turn of the century. The largest Sub-Saharan African deal of the quarter was announced at the beginning of January – MTN’s sale of its tower businesses in Uganda and Ghana to AT Sher Netherlands Cooperatief for $523 million. Deals in the materials sector accounted for 39% of Sub-Saharan African target M&A activity during the first quarter of 2020. South Africa was the most targeted nation, followed by Uganda and Nigeria.
Outbound M&A totalled $1.8b during the first three months of 2020, 19% more than the value recorded at this time last year, despite a 27% decline in the number of deals.
With advisory work on seven deals with a combined value of $993m, JP Morgan holds to the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during the first quarter of 2020.
As to equity capital markets, Sub-Saharan African equity and equity-related issuance totaled $727.8m during the first quarter of 2020, 32% less than the value recorded during the same period last year and a three-year low. The number of deals recorded also declined by one-third to the lowest first quarter tally since 2013. One initial public offering was recorded during the first quarter. Malawian telecoms company, Airtel Malawi, raised $28.7m on the Malawi Stock Exchange in February. Goldman Sachs took first place in the Sub-Saharan African ECM underwriting league table during the first quarter of 2020.
In debt capital markets, the African Development Bank raised $3b in a “Fight Covid-19” social bond at the end of March to help alleviate the economic and social impact the Coronavirus pandemic will have on livelihoods and economies in the region. With this deal, and Ghana’s $3b Eurobond in February, Sub-Saharan African debt issuance totalled $8.9 billion during the first quarter of 2020, up 44% from the value recorded during the same period in 2019, and the second-highest first quarter DCM total in the region of all-time. BofA Securities took the top spot in the Sub-Saharan African bond underwriter ranking during Q1 2020 with $1.2b of related proceeds, or a 14% market share.
