DealMakers - Q3 2020
by Marylou Greig
As this issue of the magazine was being finalised news broke of the Biden/Harris victory in the US polls. By all accounts this is good news for the African continent. Much, however, will depend on our ability to make the most of the opportunities presented by this new partnership.
Deal activity inched up slowly in Q3 with announced deals for the quarter at R56,69bn, up from R34,31bn in Q2, but down on the usually quiet first quarter deal value of R95,08bn. For the year, to end September 2020, 261 deals were announced with a total value of R188,77bn.
The largest deal, by value, during the period is the disposal of Aspen Pharmacare to Mylan Ireland of its commercialisation rights relating to the thrombosis business in Europe, valued at R12,69bn. The largest BEE deal, AB InBev’s SAB Zenele Kabili scheme, the shares of which are yet to list, is valued at R5,4bn. On the general corporate finance side, corporate restructurings and unbundling of assets took centre stage, with PSG of Capitec Bank and RMB Holdings of its stake in FirstRand. Although there were 11 listings recorded, all but two of these were on alternative exchanges, and most of which were secondary listings on A2X, with only Ninety One Ltd and Ninety One Plc listing on the main bourse – a far cry from the 23 new listings recorded in 2017. Little wonder then that the JSE is to approach regulators about listing instruments across a range of currencies, in a bid to make the exchange more investment-friendly and attractive to multi-nationals.
The table below shows deal activity by SA listed companies, excluding that of foreign firms with dual listings, unless the target is South African. The analysis of data for the first nine months of this year, versus that of the previous three years, shows a steady decline in activity and a sharp drop this year, as a result of the hard lockdown due to the COVID-19 pandemic.
As lockdown eases, there are renewed signs that deal activity is coming back to life again, albeit a fragile recovery. While it will take quite some time to regain ground lost as a result of the pandemic, there are deals in the pipeline as companies take advantage of opportunities presented. However, these deals are highly industry and deal specific and a successful close in this current environment will depend on the ability to agree on the value, assisted by innovative structuring, access to funding and the ability to navigate through regulatory hurdles.
Much will depend on what happens to the COVID-19 infection numbers over the year-end break, but DealMakers is planning, albeit on a smaller scale, to hold our physical Annual Gala Awards in February 2021. The submission of nominations for the subjective Deals of the Year will close on November 20. Looking back on my editor’s note this time last year, I came across the following “DealMakers wishes you all a safe trip to wherever you may be headed; enjoy time with friends and loved ones as one thing is for sure, 2020 will demand even more from each and every one of us”. How right I was!