Kenya’s Sh79bn deals top East Africa’s mergers and acquisitions

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Kenya recorded merger and acquisition deals worth $600.3 million (Sh79.2 billion) last year, leading its East African peers according to a new report.

The country was ranked second in 2022 when it witnessed larger deal values of $1.12 billion (Sh149 billion) to trail Sudan, which topped the charts with $1.41 billion (Sh186.4 billion) worth of transactions. Sudan subsequently dropped out of the top ranking in 2023 when its civil war intensified.

Last year, Kenya had 95 deals, including the sale of James Finlay Kenya’s tea farms to Sri Lanka’s LOLC Holdings which was valued at $23.6 million (Sh3.1 billion), according to DealMakers Africa magazine.

Others were the sale of a 31.25 percent stake in Lake Turkana Wind Power by Finnfund to asset manager BlackRock for an undisclosed sum.

Tanzania followed with Sh37.9 billion ($284.9 million) worth of mergers and acquisitions (M&A) in 12 transactions last year. Uganda was third with Sh32.6 billion ($245.5 million) worth of deals spread across 14 transactions.

Ethiopia followed with 10 deals valued cumulatively at Sh24.2 billion ($181.7 million).

"East Africa edged its way back to the top to claim the most activity per region, recording 144 deals, followed by West Africa (136 deals) and North Africa (107 deals)," DealMakers Africa said.

"The powerhouses of their regions, Kenya and Nigeria recorded the most deals at 95 and 82 respectively."

Tanzania's joint venture between Taifa Gas and Delta Marimba –a liquified petroleum gas (LPG) plant in northern Zambia valued at $100 million (Sh13.2 billion)— was among its top deals for 2023.

Ugandan conglomerate Sarrai Group and investment firm Rwimi Holdings’ acquisition of Hima Cement for $120 million (Sh15.8 billion) cemented the country’s top deal.

The parties signed a deal to buy Hima Cement from its two shareholders –Cementia Holding and Kenya’s Bamburi Cement.

Other countries in the region that witnessed M&A activity were Eritrea with one major deal worth $166 million (Sh21.9 billion) and Rwanda which had nine transactions valued at $116.6 million (Sh15.3 billion). Djibouti had a single transaction worth $7.5 million (Sh990.3 million) while Seychelles and Somalia had a single deal each of undisclosed value.

Law firm Anjarwalla & Khanna closely advised on $275 million worth of deals, ranking it fifth continentally and controlling a market share of 3.39 percent behind White & Case ($1.815 billion or 22.36 per cent) and Baker McKenzie ($1.45 billion or 17.85 percent).

Others were Linklater's $620 million with a share of 7.64 percent, Matouk Bassiouny & Hennawy ($365 million or 4.5 percent).

Bowmans followed with $237 million deal advisory roles that gave it a 2.92 percent market share of the continental M&A business.

The disposal of James Finlay Kenya to LOLC Holdings was East Africa’s deal of the year, according to DealMakers Africa’s ranking.

LOLC Holdings took an 85 percent stake in James Finlay Kenya, with the parties ceding a 15 percent stake to the local community through their investment vehicle Kipsigis Highlands Multipurpose Co-operative Society.

The deal with James Finlay has seen LOLC take over the former’s tea plantation which covers an area of 10,300 hectares including 5,200 hectares of tea fields over nine tea estates.

The UK multinational will retain its tea extraction business which will be supplied by LOLC’s local operations that will be rebranded from James Finlay Kenya to Browns Plantations Kenya to reflect the change in ownership.

“Finlays has affirmed its ongoing commitment to Kenya, retaining ownership of the Saosa tea extraction facility, to be rebranded as Finlays Extracts Kenya, which will continue to source leaf tea, timber and other services directly from James Finlay Kenya and James Finlay Mombasa, its tea sourcing and packing enterprise specializing in Kenyan tea,” DealMakers Africa said.

LOLC Holdings is a Sri Lankan conglomerate operating in trading, manufacturing, leisure, agriculture and insurance. It has a presence in many countries including Indonesia, Cambodia, Egypt, Tanzania and Nigeria.

The conglomerate’s subsidiary Browns is one of the largest tea-producing companies in Sri Lanka where it acquired James Finlay’s tea estate business in 2021.

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