1.           Scarcity of quality assets driving premiums

The supply of high-quality, scalable financial services assets remains limited. Businesses with robust regulatory and compliance track records, strong distribution channels and resilient earnings are commanding premium valuations. With multiple bidders circling a limited universe of quality assets, competitive tension is high, and sellers with a clearly articulated growth story, defined upside potential and regulatory preparedness are seeing meaningful valuation uplifts. On the other side, buyers are increasingly differentiating on speed, regulatory readiness and integration capability.

 

2.           Strategic partnerships on the rise and sometimes the preferred growth plan

Firms are increasingly looking beyond traditional M&A to build partnerships, especially with players in telecoms, retail and fintech. These alliances are helping to broaden distribution, reach underserved segments, and tap into new tech capabilities. Cross-border joint ventures are also gaining momentum to enter new markets without taking on the full cost and risk of acquisition. The ability to structure win-win partnerships, blending regulatory clarity with customer access, is fast becoming a strategic differentiator.

 

3.           Regulatory considerations front and centre

The regulatory environment has become a central pillar in deal strategy. Authorities are playing a more active role in transaction approvals, with increased focus on competition, financial stability, transformation and consumer outcomes. As a result, early and proactive regulatory engagement is now a critical determinant of deal feasibility and timeline certainty. Regulatory strategy is being embedded earlier in transaction planning, rather than treated as a down-stream approval process.

 

4.           Capital recycling driving deal flow

With capital frameworks tightening and return thresholds rising, institutions are increasingly recycling capital to fund growth. Excess capital or proceeds from the disposal of non-core assets or legacy operations are being redeployed into higher-growth or capital-light businesses. At the same time, buyers are looking for acquisitions that deliver capital uplift, whether through balance sheet efficiency, margin accretion or earnings diversification.

 

This capital-aware approach is influencing both deal appetite and transaction structuring. Boards are placing more weight on capital impact and post-deal metrics, and the ability to deliver strategic fit and capital efficiency is now central to deal approval.

 

5.           Due diligence under pressure

The technical complexity of financial services assets, especially in areas like compliance, technology integration and regulated activities, means execution risk is real. Buyers are under pressure to run diligence in parallel, not sequentially, and to get to conviction quickly. Delays in surfacing key issues are leading to pricing uncertainty or missed opportunities. Successful acquirers are front-loading third-party diligence, building execution muscle internally, and using deep sector insight to filter risk early. In a market where speed often equals certainty, the ability to transact decisively has become a competitive advantage. Delay in confirming key risks or value drivers materially increases the risk of missed windows or pricing renegotiations.

 

Looking ahead

M&A will remain a central lever for strategic repositioning in South Africa’s financial services sector. Regional banks and insurers will continue to look outward, while domestic players will focus on refining business models and rebalancing portfolios in line with capital efficiency and regulatory direction. The next wave of successful deals will be those that combine strategic clarity, capital discipline and regulatory foresight.  

 

Chellan is a Corporate Finance Transactor | RMB