- Mergers and acquisitions in South Africa are expected to rise again this year, according to Investec.
- Mark Ackerman, head of corporate finance and co-head of investment banking at Investec, said there is “new optimism among clients as they look to opportunities.”
- He said South Africa's valuation could be attractive for global companies because of its high level of industrialization and its springboard to other parts of the continent.
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Mergers and acquisitions in South Africa are expected to rise again this year as the $405 billion (R7.6 trillion) economy begins to show signs of recovery, according to Investec.
Mark Ackerman, the specialist's head of corporate finance and co-head of the country's investment banking division, says South African companies are expanding abroad as macroeconomic indicators improve around the world, while overseas companies are The company is likely to seek attractively priced assets in the local market. A financial company with operations in the UK and South Africa.
“We're seeing a renewed sense of optimism among our customers as they look at the opportunity,” Ackerman said in an interview with Bloomberg News.
Rising interest rates and geopolitical risks weighed on global trade, which fell to $2.9 trillion last year, the lowest level since 2013. South Africa announced completed M&A deals amounted to $1.9 billion in 2023, down almost 90% from the previous 12 months. In addition to rising borrowing costs, infrastructure issues such as power outages are adding to investors' concerns, according to data compiled by Bloomberg.
But Ackermann said the outlook is now more positive, adding that interest rates have peaked while the electricity crisis is starting to ease. The impending election – ahead of which some polls show the ruling ANC is on the verge of losing its national majority for the first time since the end of white minority rule in 1994 – is expected to bring about “some short-term “It will cause some noise,” he said, but there is still room for optimism.
This “comes from a platform where customers can now better understand what the short to medium term outlook will look like, and it comes from a world where there was little certainty over the past 12 to 18 months.” said Ackerman. . “We're certainly seeing increased interest from both our corporate and financial clients to put capital into opportunities,” he said.
Investec, which is listed in both London and Johannesburg, acquired a majority stake in European advisory firm Capitalmind Group last year to strengthen its M&A and corporate finance teams.
anemic growth
The International Monetary Fund expects South Africa's economy to grow by 1% this year and 1.3% over the next 12 months. This is only a slight improvement from the less than 1% growth in 2023, which was the slowest since the 2020 recession. The slow pace of recovery will encourage domestic companies to diversify overseas where they can capture faster growth, Ackerman said. The IMF this week raised its forecast for global growth this year to 3.1% from its previous forecast of 2.9%.
“There is definitely an increase in consideration of diversifying revenue overseas,'' he said. He said there were currently few South African companies capable of doing multi-billion dollar deals, but activity in the mid-market sector was likely to increase.
He said South Africa's valuation could be attractive for global companies because of its high level of industrialization and its springboard to other parts of the continent.
Ackermann sees growing interest in the renewable energy and digital infrastructure sectors, as well as the pharmaceutical, retail and consumer sectors. He also expects the rand to strengthen by the end of the year.
