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• Labat Africa to undertake private placement of shares
  The company, which has a dual listing on the JSE and Frankfurt Stock Exchange, is to undertake a capital raise via a private placement of shares to selected European investors to secure new capital of €18 million. The placement proceeds will be used to accelerate the implementation and expansion of the Labat Healthcare projects and will also create much needed liquidity of the Labat share in the international equity markets.

• Results of Hammerson’s scrip distribution election
  Hammerson has issued a total of 194,637,920 new company shares in terms of its scrip distribution alternative. The company’s total issued share capital now consists of 4,614,095,081 ordinary shares.

• Reinet Investments repurchases shares
  As part of the repurchase programme announced on March 24, 2022, the company has repurchased a further 244,325 ordinary shares at an average price of R309.24 per share for a total consideration of R75,6 million (€4,5 million).

• South32 repurchases shares
  The company this week repurchased 1,847,463 shares valued at A$28,79 million.

• Pan African Resources repurchase shares
  The company announced the initiation of phase one of a share buyback programme to purchase up to R50 million (£2,6 million) worth of ordinary shares over one month commencing April 1, 2022. Purchases will take place on the LSE and JSE with c. R25 million purchased on each exchange. The shares bought back on the JSE will be in compliance with the MAR Buy-Back Regulation to maintain consistency between exchanges. This week the company repurchased 10,993 shares on the JSE valued at R46,720.

• Glencore repurchases shares
  The company this week repurchased 2,092,281 shares for a total consideration of £10,15 million in terms of its existing buyback programme which is expected to end in August 2022.

• British American Tobacco repurchases shares
  This week BAT repurchased 1,661,177 shares for a total of £55,41 million. The purchased shares will be held in treasury with the number of shares permitted to be repurchased set at 229,400,000.

• Fairvest to list on A2X
  The company will take a secondary listing of its A ordinary shares and B ordinary shares on A2X with effect from May 11, 2022. Fairvest will retain its primary listing on the JSE.

• This week two companies issued profit warning announcements
  The companies were: Oando plc and Altron.

• Five companies either issued, renewed or withdrew a cautionary this week
  The following companies advised shareholders: Nutritional Holdings, Onelogix, Santam, Sanlam and Mas plc.

DealMakers is SA’s M&A publication – www.dealmakerssouthafrica.com

EXCHANGE LISTED COMPANIES

• Sanlam’s release this week detailing the creation of a pan-African joint venture with Allianz SE, fleshes out its cautionary announcements to the market first made in December 2021. Sanlam operates in 30 countries and Allianz in 11 countries. Sanlam will hold a controlling 60% stake in the joint venture which will hold the two parties’ African operations (excluding South Africa). The joint venture has a minimum period of 10 years and Allianz can increase its stake from 40% to 49% overtime. The equity value of the joint venture is c.€2 billion (R33 billion). Sanlam’s operations in Namibia will not be included initially. Also excluded are the non-African operations in India, the Middle East and Malaysia. The transaction enables Sanlam to enhance its capabilities in existing markets and expand its footprint and market leading positions in certain key jurisdictions on the African continent. In addition to this, Sanlam subsidiary Santam will dispose to Allianz its 10% interest in SAN JV for c.R2 billion. If successful, Allianz will contribute this newly acquired 10% stake to the new joint venture with Sanlam.

• Datatec subsidiary Analysys Mason, has acquired Northern Sky Research, a global provider of satellite and space market research and consulting services for an undisclosed sum. The acquisition places Analysys Mason in a strong position within this field to advise clients.

• Equites Property Fund, has announced the sale by its subsidiary Equites Newlands Group, of undeveloped land at Plots 2 and 3, Equites Park in Basingstoke, UK for a purchase consideration of £48,5 million (R969 million) to Promontoria Logistics UK 6

• Universal Partners has alerted shareholders to a firm intention offer by Glenrock Lux PE No1 and Glenrock Lux PE No2 for a cash consideration of R18.63 per share. The parties collectively hold a 34.01% stake, following the acquisition of 24,75 million shares, and are as a result making a mandatory offer to shareholders. The company has a primary listing on the SEM and a secondary listing on AltX.

UNLISTED COMPANIES

• EXEO Capital is to acquire a majority stake in Chemical Process Technologies, the sole manufacturer of animal active pharmaceutical ingredients on the African continent. The investment by EXEO is a strategic move aligned with its Agri-Vie Fund II to invest in scalable businesses within the sub-Saharan agricultural and food value chains.

• GoMetro, a logistics tech platform, has raised R16,3 million in a seed extension round from venture capital firms Kalon Venture Partners, Hlayisani Capital, Tritech Global and 4Decades Capital. The funds will be used to scale its innovative tech platform, product engineering and development within South Africa and into the UK and US markets.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

DealMakers AFRICA

• Holmarcon, a Moroccan insurance and finance group, and Credit Agricole SA, a French banking institution, have signed an agreement whereby Homarcom will acquire a majority stake in Credit du Maroc. The acquisition is part of Holmarcon’s strategic vision to build an integrated financial centre with a pan-African vocation. The transaction will be executed in two stages – an initial 63.7% stake followed by a further 15% stake.
  
• Eden Life, a home concierge services scheduling platform, headquartered in Lagos, has acquired Lynk, a platform connecting households and businesses with verified domestic workers, artisans, and blue-collar professionals in Nairobi. Financial details of the transaction were undisclosed.
  
• Sungara Energies, a UK entity focused on sub-Saharan African upstream oil and gas, has entered into an agreement with state-owned Sonangol Pesquisa E Produção, to purchase a 10% participating interest in Block 15/06 offshore Angola. The deal is worth US$500 million including a contingent payment of up to US$50 million.
  
• Hello Tractor, a Nigerian tractor-booking platform, has raised US$1 million in funding from Heifer International. The platform utilises a tracking device and software that allows farmers and tractor owners to book connected tractors using their phones. The funds will be used to provide loans for tractor purchases which can be repaid from revenues earned by leasing the tractors to local farmers.
  
• African Finance Corporation, an infrastructure solutions provider, has received US$35,5 million in equity investments from the Seychelles Pension Fund, the Government of Sierra Leone and the Ghana Infrastructure Investment Fund.
  
• Africa GreenCo, a renewable energy trader, has raised US$15,5 million from InfraCo Africa, the Danish Investment Fund for Developing Countries and the EU-funded Electrification Financing Initiative. The funds will be used to scale GreenCo’s innovative offering as Zambia’s first renewable energy buyer and services provider.
  
• Norebase, a Nigerian-based trade technology firm, has secured US$1 million in a pre-seed funding round led by Samurai Incubate and Consonance Investments. Funds will be used to build the single digital infrastructure and technology tools to ‘power trade across the continent’ and to broaden its trademark registration technology stack.
  
• Westa.solar, a Nigerian provider of solar power solutions in West Africa, has secured a US$1,58 million mezzanine loan to develop solar projects in the country. The loan which was secured from the Development Bank of Austria, will be used to accelerate the development of solar projects and to reduce energy costs and emissions of commercial and industrial customers.

DealMakers Africa is the Continent’s M&A publication.

www.dealmakersafrica.com

When a new year comes around, M&A practitioners are often asked to discuss trends in the market. Nowadays, this is always coupled with a request for a fresh view on what the pandemic has meant and will mean for deal-making. In my experience, the starting point for identifying trends is contextualisation.

So, let’s consider the context: using the DealMakers public deal flow measures, as you might expect, M&A activity improved in 2021 from 2020. Some caution is warranted in that DealMakers only reliably measures the overall market in public deals, and there are many nonpublic deals not notified to DealMakers. However, it still remains the best, although incomplete, proxy we have for the total M&A market volume in South Africa. The 2020 calendar year (411 deals) is a shockingly low base though, given the effects of the first unprecedented worldwide lockdowns and the associated economic consequences. However, consider pre-COVID: in 2019, there were 488 deals; in 2018, 525 deals; and in 2017, 548 deals. So, one overall trend is that the South African M&A market was suffering a nasty downturn before COVID even swaggered up to bully the global economy out of its lunch money. In that sense, 2021 (483 deals) even in the context of the continued pandemic, begins to feel like the start of a recovery, particularly the strong fourth quarter.

That’s one trend contextualised, but is it the whole view? Of course not.

Perspective tends to shift if the camera draws back a bit further. The 2021 year was one for the record books for M&A globally. Not just a record gain from 2020, but a record year all by itself (PWC Global M&A Industry Trends: 2022). The M&A market worldwide has been booming to new heights, despite the ongoing pandemic. In that context, as might be expected, given the general state of its economy and political stagnation, South Africa is lagging.

There is always an argument to be made that corporate activity movements in Europe and the US (and increasingly other parts of the globe) arrive in South Africa with a bit of a time lag. The thinking goes something like this: capital is deployed in those markets and as it chases returns, it pushes up asset prices until the returns are not as easy to come by; the capital then overflows into other markets, where the asset prices have not yet reached the same heights. Thus, a protracted M&A boom in bigger jurisdictions should overflow into markets like South Africa.

It should logically follow that the trends in those other markets should be broadly reflected here when the overflow reaches us. Anyone fancy a SPAC for a fintech play?

Does all of this mean that the boom times are just around the corner?

The anecdotal evidence could easily lead a glass-half-full observer to reach quite a cheerful conclusion. Some of this is, no doubt, new year hopefulness, as South Africa bobs up from under a nasty COVID wave and people start to trickle back into their eerily quiet offices a few days a week. But there does seem to be a real feeling of (admittedly, still cautious) optimism around.
Life in the pandemic has taught us some valuable lessons, if we take heed:

• Dealmaking continues through the most challenging of circumstances, and sometimes because of the most challenging of circumstances;
• We are more resilient than we realised;
• and The world continues to turn.

Also, and perhaps the most important context of all: we are not great at identifying the fabled trends we keep looking for. During the scary days of the first lockdown, it was widely thought that there would be many more distressed sales than actually happened. We anticipated that transaction flow would be more depressed than it actually turned out to be. We thought that there would be more foreclosures, more emergency equity capital raises, more equity holders sitting tight to wait out the COVID storm. All those things happened, but not to the extent predicted, and often much later than we anticipated. Our predictions were affected by that most human of things: the emotions of the moment.

Of course, it is those emotions that bubble up as the next geopolitical catastrophe invades Ukraine and the front pages. Like the pandemic, the terrible human consequences deserve our attention, our outrage and our emotions, but we need to realise that our assessment of the effects of such things on M&A markets needs a bit more distance.

So perhaps the best thing to do is to temper both optimism and pessimism, acknowledge that we work in an environment noisy with news, pushed and pulled by a multiplicity of variables and, in the words of the meme, just keep calm and carry on.

Dave Pinnock is a Director in the Corporate & Commercial practice and Co-Head for the Private Equity sector at Cliffe Dekker Hofmeyr, incorporating Kietie Law (Kenya).

This article first appeared in DealMakers’ sister publication Without Prejudice

DealMakers is SA’s M&A publication.

www.dealmakerssouthafrica.com