Nigeria Dealmaking Off to Record Start as 2018 Deals Hit $1.2bn

By February 23, 2018 Investment News

Nigeria has recorded some $1.27 billion (N457.65 billion) in mergers and acquisitions since the turn of 2018, the best start since 2008, when Businessday started tracking deal data.

That’s double the total deals recorded in the whole of 2017 and is 186 percent more than the $384 million worth of deals recorded in the whole of 2016.

Businessday analysis show that the real estate sector accounted for the largest deal activity by value while the power sector- mostly solar- accounted for the most deals by volume.

“From our perspective, we have also noticed a significant increase in deal flow as investors get over the foreign exchange illiquidity that dogged deal flows in the last two years,” said Adekunle Adebiyi, vice president at Lagos-based fund managers, MBO capital.

“The impending 2019 elections has also got private equity investors scrambling to close deals as early as possible,” Adebiyi added.

The deal boom in Nigeria confirms a global dealmaking that has made its strongest start since the turn of the century, on the back of boardroom confidence from US tax reform, a strengthening international economy and surging equity markets.

A total of $273 billion in mergers and acquisitions so far this year marks the busiest January since the peak of the dotcom boom in 2000, data from Dealogic shows.

Deals include Dominion Energy’s $14.6bn takeover of US utility group Scana, French drugmaker Sanofi’s $11.4bn purchase of biotech Bioverativ and Bacardi’s $5.1bn acquisition of the company that makes Patrón tequila.

In Nigeria, the biggest deal was in the real estate space where US-based private equity firm, Milost Global Inc., together with its African subsidiary, Isilo Capital Partners (Pty) Ltd, closed the 100 percent acquisition of Primewaterview Holdings Nigeria Limited, a large scale holding company with a portfolio of Real Estate, Oil & Gas, Quarry Mining, Healthcare and Power, for a total consideration of $1.1 billion (N396 billion). The deal was announced January 31.

Primewaterview Limited is a major real estate player in the luxury property development business of the Nigerian real estate market. The company is focused on developing residential property to a select clientele with an initial focus on highbrow areas in Nigeria’s densely populated Lagos State particularly Ikoyi, Victoria Island and the rapidly developing Lekki Peninsula, according to information provided on its website.

The second largest deal was worth N21.45 billion and represents the 26.8 per cent acquisition of soft drink bottling company, Seven-Up, by majority shareholder, Affelka SA. The deal was done January 11.

Next in line is the $35 million (N12.6 billion) acquisition of e-commerce firm, Konga by Zinox on February 2. Konga struggled since an 81 per cent slide in the naira saw its initial valuation of $USD200 million take a haircut.

The fourth deal by value size is a N10.8 billion investment by the African Infrastructure Investment Managers (AIIM) and one of the largest Africa-focused private investment firms, Helios Investment Partners in Starsight Power Utility Ltd.

Deploying a solar–diesel–battery hybrid system, Starsight provides captive power and energy efficiency solutions to commercial, multi-site clients in Nigeria through long-term contracts. The deal was announced February 5.

Deals this year also include the $25 million (N9 billion) acquisition of Nigerian medical diagnostics business, Echo Scan by London-listed Integrated Diagnostics Holdings (IDH) which created a joint venture with Man Capital, the investment arm of the billionaire Mansour family.

IDH and Man Capital partnered with the World Bank’s International Finance Corporation to invest in Echo-Scan, which is one of the biggest medical diagnostics players in sub-Saharan Africa. The deal was announced January 23.

In 2018, Atlas Mara was also involved in a deal worth N6.6 billion for the acquisition of a  3.5 per cent stake in Union bank  on January 15.

The transaction increased Atlas Mara’s stake in the lender to 48 per cent worth N91.4 billion. Union bank has a market cap of N190.498 billion.

Rensource, a Lagos-based distributed energy provider also secured N1.2 billion ($3.5 million) in bridge financing to grow its power-as-a-service renewable energy business by expanding across Nigeria this year .

The round was led by Amaya Capital Partners; however, 0ther key investors included the Omidyar Network and CRE Venture Capital.  The deal was announced January 31.

Canada based, Reservoir Capital Corporation (Reservoir) announced on February 6 disclosed a 60 percent acquisition of Kainji Power Holding Limited (KPHL). The deal value was not disclosed.

Reservoir Capital, founded on March 23, 2006, is focused on renewable energy based in southeast Europe.

Source: BussinesDay