Companies

Kenyan companies lead merger and acquisition deals in Comesa region

WK

Mr Wang’ombe Kariuki, Competition Authority of Kenya director-general. PHOTO | FILE

Kenyan companies are leading merger and acquisition transactions in the Comesa region, a report by the trade bloc has showed.

The Common Market for East and Southern Africa’s (Comesa) Competition Commission earned Sh314 million ($3.1 million) transaction fees between December 2015 and October 2016 from mergers.

The transactions mainly capture financial sector mergers, which accounted for about 70 per cent of all deals in the period.

Kenya and Zambia accounted for a significant percentage of these merger deals.

“The case of Zambia and Kenya may be explained by the fact that their economies are relatively large and have outward looking policies which provide a conducive environment for business,” said the Commission’s chief executive, Mr George Lipimile.

Mauritius also had high rates of mergers due to its role as a preferred country of registry for regional investors.

The country has numerous double taxation agreements with other countries in Africa. Its corporate tax rate is also low relative to other African countries.

Other countries with high rates of mergers were Uganda and Zimbabwe. Paradoxically, Egypt and Ethiopia, amongst the bloc’s largest economies, were not among the high performers.

The commission blames their “generally in-ward looking” stances. The commission will keep half of the fees collected during the period. The other half will be shared with national competition authorities as per a pre-agreed upon formula.

READ: Mergers and acquisitions in East Africa on the rise as firms seek capital, expansion

Although the formula has not been disclosed, it is partly based on the share of mergers that each country contributes. In 2014, Kenya received Sh69 million out of a total Sh138 million of sharable filing fees.

According to statistics from Burbidge Capital, Kenya has been dominating activity on mergers and acquisitions in East Africa with 15 deals in insurance, beauty, e-commerce, hospitality, beverage and logistics in the year to April 2016.

“If at all we’re recording highly in Comesa it is a positive thing because it means our firms are expanding regionally,” said Competition Authority of Kenya (CAK) director-general, Mr Wang’ombe Kariuki.

Last year, Equity Bank made a foray into the Democratic Republic of Congo (DRC) through a controlling stake in Pro Credit Bank. 

Meanwhile, Old Mutual increased its stake in UAP to 60.7 per cent. Rebranded UAP Old Mutual, the company recently announced  that it was bringing its banking and insurance services under one roof.

In April, the UK development finance institution, CDC, bought into I&M Bank.  Currently I&M is in the process of acquiring Giro Commercial Bank.