DealMakers - Q2 2022 (released August 2022)

Editor's Note

by Marylou Greig

Challenges such as inflation, disruption in the energy/electricity supply, continued tensions in Ukraine and an economic slowdown, not only in South Africa but globally, have frustrated the closing of transactions. So while the pipeline remains healthy, seeing these deals across the finishing line is another matter and this is evident in the M&A numbers for H1 2022. 

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Marylou Greig

The total value of M&A activity during this period (including failed deals, of which there were three) was R306,2bn from 174 deals. While the deal value was up significantly on H1 2021’s R216,7bn, the number of deals was down 25% on those recorded in H1 2021. To a degree, the increase in the aggregate value of M&A transactions can be attributed to the two largest deals by value for this period – Gold Fields’ acquisition of Yamana Gold, valued at R103,85bn (US$6,7bn) and Sanlam’s African joint venture with Allianz SE, valued at R33bn (€2bn). 

Of the 174 deals executed in H1 by companies listed on one of the local exchanges, 142 of these involved companies with primary listings. Of these, 34 were cross border transactions by SA domiciled companies, with Africa and the UK being the top two destinations (pg 8). Drilling down further, the targets across Africa were, in the main, insurance, resources and financial services; while in the UK, real estate dominated the deals. 

Two significant BEE deals were reported in the period – by Shoprite, valued at R8,89bn, and by Old Mutual, valued at R2,8bn (page 6). 

While capital markets remain volatile and unattractive for new listings, more and more corporates with primary listing on the JSE are taking secondary listings on A2X. Share buy-backs by corporates continue and, during the period, a total of R71,64bn was returned to shareholders – up significantly from the R24,13bn returned in H1 2021. Shareholders also received R28,1bn in the form of special dividends, up significantly from R5,2bn in the comparable period in 2021. 

Looking ahead, deal activity is expected to gain momentum in H2 2022 as corporates adapt to changing market conditions, which will provide an impetus for acquisitions, disposals and corporate rejigging. For those corporates sitting on high levels of cash, they will be in a position to act on strategic opportunities at more attractive valuations.

Included in this issue is the second edition of Women of SA’s M&A and Financial Markets Industry and, for the first time, Women of SA’s Private Equity and Venture Capital Markets, which forms part of this issue of Catalyst. The stories of the women who grace these pages offer inspiration and words of courage, and are examples of how hard work, resolve and sheer determination have seen their aspirations become reality.