M&A (merger and acquisition) activity in Africa continued on a downward trend in 2024, from already depressed levels in 2023, due to the cost of capital remaining high, major geopolitical events persisting, and the general uncertainty affecting global markets.

This was according to global law firm Herbert Smith Freehills' annual M&A report, which said Monday that uncertainty through the year was amplified by the 74 national elections held globally.

“2021 and 2022 were stand-out years for M&A in Africa, and 2023 was a year which 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,” the report said.

However, indications of green shoots from 2024 included that deal value increased significantly when compared to 2023.

“In 2024, M&A deal volume in Africa decreased nearly 10%, but deal value increased by 85%. The dramatic increase in value was in part due to significant transactions which occurred in the mining industry, particularly in relation to gold and critical minerals,” the report said.

South African targets accounted for over 60% of deals by value and over 30% of deals by volume in Africa during 2024.

Nigeria was the second most active by value, with around 15% and 8% of deals by volume. Egypt was third by deal value, accounting for around 8% and 25% of deals by volume.

France was the largest inbound acquiror by value in 2024, with $2.8 billion invested across over 20 deals, followed by the US, which invested $2.4bn across more than 50 deals, and China, which invested over $2bn in over 10 deals.

Consumer and financial services remained the most active sectors by deal volume in Africa. Due to the two mega spin-offs of Anglo American, the materials sector captured over 50% of deal value in 2024 and was also the third most active sector by volume in 2024 (up from fourth in 2023).

During 2023, there were only two transactions in Africa that exceeded $1bn in value. In 2024, five transactions exceeded $1bn.

Some of the significant transactions were: Anglo American’s proposed spin-off of its South African platinum business, Anglo American Platinum, for $7.4bn; its proposed spin-off of iron ore business Kumba, at $5.4bn; Canal + France SA's proposed take-private of MultiChoice Group for $2.6bn including net debt; AngloGold Ashanti's acquisition of Centamin in a $2.5bn stock and cash deal; and Gold Fields' acquisition of Osisko Mining for $1.39bn.

The report said 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.”The 2024 VC performance is 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 was Tyme Group's Series D capital raise, which secured $250 million in funding.

The report said worldwide geopolitical uncertainty and its economic effects would likely continue to have an impact on M&A transactions in Africa.

“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.”

BUSINESS REPORT