Africa Records 64% Fall In Investment Banking Fees

VENTURES AFRICA – Sub-Saharan Africa recorded a 64 percent fall in its investment banking fees in the first half of 2012 as a result of subdued merger and acquisition activity, despite the magnet nature of the region that continues to attract investors, data provider Thomson Reuters disclosed on Tuesday.

In South Africa, Thomas Reuters said Standard Bank and Rand Merchant Bank (RMB) are the only investment banks that were listed on the top-10 table by value of fees earned during the period under review.

RMB was placed second with fees of about $31 million; Investec third with $26.1 million and Standard was seventh with earning fees of $16.7 million.

Comparing this data with that of first half of the year, it was revealed that Standard earned more than $7.3 million and RMB $4.7 million.

Although the rate of making deals seems to have been slowed down by turmoil in the EuroZone, interest in merger and acquisition activity in sub-Saharan Africa remains high.

Investment banking fees in the first half of 2012 in sub-Saharan Africa fell from $321.4 million in 2011 to $114.1 million. Furthermore, with a decrease in fees by 34 percent to $45.2 million, the region recorded its slowest quarter since 2005.

The data provider also stated that merger and acquisition fees totalled $49.5 million (43 percent of all investment banking fees), while equity capital market fees amounted to $28.2 million. It stated further that sub-Saharan Africa-targeted mergers and acquisitions totalled $7.2 billion during the first half of 2012, which is a 36 percent decline from the same period in 2011 when it announced total activity of $11.2 billion.

“Materials remains the most targeted industry in sub-Saharan Africa, with $3.4 billion, 48 percent of the activity announced during the first half. South Africa is the most targeted sub-Saharan nation, with $4.4 billion, or 61 percent of the activity, followed by the Democratic Republic of the Congo with $1.3 billion (18 percent),” Thomas Reuters said.

Analysis showed South Africa ranked highest in the list of most acquisitive nations of sub-Saharan companies, with 53 percent of the activity, followed by the United Kingdom which had 27 percent.