Law firm Herbert Smith Freehills (HSF) finds in its latest yearly merger and acquisition (M&A) report that activity in Africa continued on a downward trend in 2024, with a further decrease on the depressed level of activity during 2023.

Contributing factors to the downturn included the cost of capital remaining high, major geopolitical events persisting and the general uncertainty affecting global markets, and that uncertainty was amplified by the 74 national elections held globally during 2024.

While 2021 and 2022 were standout years for M&A in Africa and 2023 was a year that marked a sharp decline in activity as levels of activity fell to pre-Covid levels, 2024 continued on a similar trajectory to 2023 as deal volumes continued to decrease.

However, the green shoots from 2024 were that deal value increased significantly when compared to 2023.

In 2024, M&A deal volume in Africa decreased by nearly 10% but deal value increased by 85%.

The dramatic increase in deal value was, in part, due to significant transactions which occurred in the mining industry, particularly in relation to gold and critical minerals.

HSF reports South African targets accounted for over 60% of deals by value and more than 30% of deals by volume in Africa during 2024. Nigeria was the second-most active by value, with about 15% and 8% of deals by volume. Egypt was third by deal value, accounting for about 8% and 25% of deals by volume.

From a foreign capital investment perspective, France was the largest inbound acquirer by value in 2024, with $2.8-billion having been invested across more than 20 deals, followed by the US which invested $2.4-billion across more than 50 deals and China which invested over $2-billion in about ten deals.

From a sector perspective, consumer and financial services continue to take the top two places as the most active sectors by deal volume in Africa.

Owing to the two mega spinoffs of Anglo American, the materials sector captured more than 50% of deal value in 2024 and was also the third-most-active sector by volume in 2024.

Ongoing worldwide geopolitical uncertainty and its economic effects will continue to have an impact on M&A transactions in Africa, HSF states.  

“The increased ticket sizes and improvement in deal value in 2024 was promising and we expect an upward trend of M&A transactions in 2025, but the impact of global uncertainty remains to be seen,” the firm adds.

NOTABLE TRANSACTIONS

During 2023, there were only two transactions in Africa that exceeded $1-billion in value. This increased in 2024, with five recorded transactions exceeding $1-billion.

Some of the significant transactions on the continent from a deal value perspective were Anglo American’s proposed spinoff of its platinum business Anglo American Platinum for a reported $7.4-billion; Anglo American’s proposed spinoff of its iron-ore business, Kumba, valued at $5.4-billion; French multinational Canal Plus’ proposition to buy out MultiChoice Group for $1.9-billion, or $2.6-billion including net debt; AngloGold Ashanti's acquisition of Centamin in a reported $2.5-billion stock and cash deal; and Gold Fields’ acquisition of Osisko Mining for $1.39-billion.

VENTURE CAPITAL
HSF says venture capital (VC) continued to be suppressed on the continent during 2024.

Many VC firms continued to focus on their existing portfolio and in ensuring that they had sufficient dry powder to support their existing investments in follow-on and bridge rounds, and remained cautious about deploying into new investments, as was the case in 2023.

According to African Private Equity and Venture Capital Association, the 2024 VC performance was on track to be the lowest since 2020 as deal volume decreased by 36% and deal value decreased by 35% in 2024 when compared to 2023.

A notable African VC transaction in 2024 was Tyme Group's Series D capital raise, which secured $250-million in funding and resulted in Tyme reaching unicorn status, with a valuation of $1.5-billion.