African economic growth offers M&A opportunities

Optimism about high growth rates has made Africa the light at the end of many an investor’s post-2008 tunnel. Geneew ral confidence in sub-Saharan Africa is particularly strong, and is manifested in increasing merger and acquisitions (M&A) activity in the region.

Africa’s growth is highlighted by the International Monetary Fund’s October 2012 forecast that Africa will have 11 out of 20 of the fastest-growing economies in the world over the next five years. Many African countries are enjoying high growth rates due to their natural resource wealth.

M&A deals in the mining and energy sectors on the continent ranked first as a percentage of M&A deals in Africa in 2012, fuelled by a surge in activity from Chinese companies. China’s Minmetals, for instance, bought Democratic Republic of Congo-based base-metals miner Anvil Mining for US$1.3 billion last year; and Jinchuan Group and the China-Africa Development Fund (CAD Fund) agreed to pay US$227 million for a 45% stake in South Africa-based Wesizwe Platinum.

Patrick Ache is a senior associate at Webber Wentzel, one of the leading corporate law firms in Africa and the South African member of ALN, an established group of Africa’s 12 foremost law firms.