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New EA corporate deals drop 15pc in first 10 months

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Edward Burbidge, I&M Burbidge chief executive. FILE PHOTO | NMG

The number of disclosed corporate deals in East Africa (EA) dropped by 15 per cent in the first 10 months of the year compared to a similar period in 2016, reflecting a continued dearth in the capital markets across the region and perhaps political activity in Kenya.

A report on the deal landscape done by I&M Burbidge Capital for October shows that Kenya, the largest regional economy, has continued to dominate the space.

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However, most of the deals going through are in mergers, acquisitions and private equity investments.

There were seven disclosed deals during the month — six in Kenya and one in Uganda.

“Deal making remained resilient in October with four merger and acquisitions, two PE deals (and one private placement) disclosed.

The performance closely matched that of September and brought the total number of disclosed transactions in the year-to-date to about 65 — which is, however, 11 deals lower than the same period in 2016,” said I&M Burbidge chief executive Edward Burbidge in the report.

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Charged climate

Kenya, which has been the epicentre of corporate deals in the region, has endured a charged political climate this year, which could have affected inward investment.

The disclosed value of deals for the year in the region stood at $1.79 billion (Sh184 billion) by the end of October, compared to $1.81 billion (Sh186 billion) in the same period last year.

There are a significant number of deals whose values have not been made public nevertheless.

Financial services continued to be the key sector for deals in the region last month, accounting for 25 per cent of the total.

Energy, oil and gas followed at 15 per cent, with the fast moving consumer goods and logistics segment accounting for nine per cent of total deals.

These sectors have been attractive to foreign funds that are investing in Kenya and other regional countries looking to take advantage of a fast growing middle class.

A recent report by consultancy KPMG showed that private equity firms raised about Sh114 billion ($1.1 billion) for East African investments between 2015 and 2016, a 41 per cent increase on the amount raised in the preceding seven years.