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DealMakers - Q2 2021 (August 2021)

Editor's Note

by Marylou Greig

Several months into this year, deal reporting once again gained traction, and the relief experienced by the industry advisers was tangible. Investors who had put plans on hold due to the pandemic slowly emerged from the side lines, and advisory firms had their work cut out once more. Noises on the political front were perceived as encouraging; it is no secret that South Africans are good at taking the glass half-full approach. 

Marylou e.jpg
Marylou Greig

The total value of M&A activity for H1 2021 (excluding failed deals) was R175,7bn from 213 deals, a significant increase from the previous year’s figures of R108bn off 157 deals. A closer look (page 10) shows that the greater number of deals for the period fell in the ‘over R50m, under R200m’ value category, though the total value of these deals represents just over 2% of the aggregate value for the period. Of the 213 deals executed in H1 by companies listed on one of the local stock exchanges, 186 of these involved companies with primary listings. Of these 186 deals, 36 were cross border transactions by SA domiciled companies with Africa and Europe being the top two regions. Drilling down further, 26% of targets were in the property sector, followed by technology 15% and financial services 11%.

Those corporates such as Anglo American, Sibanye Stillwater, Barloworld and Allied Electronics, among others in the enviable position of being able to give back to shareholders, have taken the decision to do so via share repurchases and/or the distribution of special dividends. On the flip side, 19 companies remain suspended on the JSE. Delistings continue, with 15 companies terminating listings during H1 2021, and a further three (at this stage) set to do so before year-end. 

The sell-down by Prosus of a 2% stake in Tencent in April, valued at US$14,6bn, dominates the value table of top 10 transactions for the six months to end-June. Given the hammering received by the Prosus and Naspers share prices in early August in reaction to the Chinese authorities regulatory crackdown on technology companies, a re-evaluation of the stocks may well be seen, at least until a winner to match Tencent can be found.

While the mining industry’s rapid recovery and economic rebound has done much to highlight the importance of the sector in the economic recovery scenario, the social unrest in July, and the resultant damage to economic infrastructure, is likely to negate any headway made. The cabinet reshuffle (or rather restructure) by President Ramaphosa, although long in coming, is the boldest move he has made since his election in 2019. The unprecedented violence laid bare the inability of SA’s intelligence and security units to effectively carry out their mandate. The hope, however, that new appointments would see an end to cadre deployment, and the appointment of competent skills was upstaged by his need to carefully navigate the political minefield that is the ANC.

The feature, Women of SA’s M&A and Financial Markets Industry, the first of its type to be carried by DealMakers, has been extremely well supported and I would like to thank all those who believed in the idea and participated. Each woman featured has a unique and inspiring story to tell, and it is the hope that this feature will offer inspiration to young women; give them courage where needed and the realisation that they are not alone, that there are others who have walked a similar path. 

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