Former Telkom Kenya managing director, Mr Sammy Kirui , with France Telkom executive vice president, Mr Marc Rennard (centre), and the business development director, Mr Bruno Bourgin. In Kenya, East Africa’s largest economy, among the largest deals to date have been the Sh26 billion acquisition of a stake in Telkom Kenya by France Telkom and the Sh17 billion Stanbic Bank-CFC  merger.

“In relative size we (Africa) are not as large as other advanced markets but regardless of what is reported in internationally, there is a lot of M&A activity in the continent,” says Mr Vishal Agarwal, transaction partner at financial services advisory firm, PWC.

Data from financial datastream provider Thomson indicates that in the last one year mergers worth $711 billion have been made globally with Africa — lumped up together with the Middle East- accounting for a paltry 2.18 per cent of the total deals which is a slight increase from the 1.74 registered in the same period last year.

But Mr Agarwal says that a lot of the activity in the African market is not captured by internationally due to the market’s nascent nature which has led to skewed information with regards to regional deal comparisons.

“Traditional methods used to capture M&A activity globally do not entirely provide the complete picture of deals closed in Africa, the market is still new and is yet to tap into those resources,” says Mr Agarwal.

While the number of deals reported from Africa may be grossly underestimated, the improving economic climate in Africa is not going unnoticed; new partners are emerging as firms from Asia Tiger economies court the continent’s blue chips.

The rise in stature of Indian and Chinese firms in the African business front points to the realignment of trade partnerships from Western firms to the emerging economic tigers of Asia.  

Underpinning the Asian tigers growing business clout, China and India have bought heavily into key growth sectors in Africa including finance, manufacturing, mining and telecommunications to consolidate markets for its finished goods and ensure steady supply of raw materials for its industries.

In one of the continent’s biggest deals to date,  China’s China Industrial and Commercial Bank of China (ICBC) forked out an estimated Sh375 billion ($5.6 billion) to acquire a stake 20 per cent in Standard Bank, the largest bank in Africa by assets.

And in turn, South Africa remains the continent’s largest economy and has laid claim to some of the biggest deals to date in the African business scene to date.

This is as well as topping the leader board for having the highest number of mergers and acquisitions in the continent.

In Kenya- East Africa’s largest economy- among the largest deals to date have been the Sh26 billion acquisitions of a stake in Telkom Kenya by France Telkom Kenya and the Sh17 billion Stanbic-CFC mergers.

Altech Stream Holdings Ltd of South Africa joint venture between Allied Technologies Ltd (AT) and SK Telecoms Sarl to acquire a 51 per cent interest in Kenya Data Networks Ltd, a Nairobi-based provider of telecommunications services, from Sameer Group.

Mr Mike Du Toit of Stanbic Bank and Mr Madabhushi Soundararajan of CFC Bank at a Press conference in Nairobi.

The first quarter of the year also witnessed International logistics firm, Agility’s plans to acquire Starfreight Logistics Limited, a Nairobi-based provider of customs clearance, warehousing, project forwarding, haulage, cross-border documentation, transport, air freight and custom examination services.

Terms were not disclosed. Essar Energy Overseas Ltd of India, a unit of Essar Oil Ltd (EO), agreed to acquire a 50 per cent interest, state-owned Kenya Petroleum Refineries Ltd (KPRL), a Mombasa-based producer and wholesaler of petroleum products, from Shell Petroleum (17.1 per cent), a unit of Royal Dutch Shell PLC, BP PLC (17.1 per cent) and Chevrontexaco Global Energy Inc (15.8 per cent), a unit of Chevron Corp. The transaction was subject to regulatory approvals.

Essar Communications Holdings, of Mauritius and a unit of Essar Group, acquired a 49 per cent stake, in Econet Wireless International of Kenya, a provider of telecommunications services. Smaller deals in the year were closed by the likes of local firms, TransCentury Ltd and listed firm Olympia Capital which have marked their presence in the deal making front by making key acquisitions in Southern Africa. Why deals remain low in Kenya.

But even as Africa becomes prime hunting ground for international investors, M&A activity in Africa still pales in comparison to firms in similar industries in more developed economies.

“Locally, there has been failure to realize that M&A is a good strategy for growth as opposed to growing organically,” says Kariuki Thande, head of corporate finance at CBA Bank.

Mr Thande says that many local firms are unwilling to relinquish control of firms as well rationalizing of operations that may come with the merger or acquisition by another firm. But this opposition may come at a cost.

“Firms that fail to consider M&A as a catalyst for growth may find their competitiveness declining especially with the entry of firms from South and Western Africa,” says Mr Thande.

The growth that Africa is experiencing, access to resources as well as the opportunities in infrastructure development push the case that private equity will remain a significant driver of M&A in the future..

According to Ernst & Young in their 2007 report on mergers and acquisitions in Africa, Globally there appeared to be an increasing amount of interest in the mining sector.  

The character of the largest deals typically included the following elements: they were transactional, they were agreed deals and they were deals between companies in the same sector. The stated motivation for the deals followed familiar patterns; they constituted an attempt to achieve a larger physical presence around the world, achieve greater efficiency of operation through gaining greater economies of scale and gain greater dominance.
“There’s a real case for M&A in Africa,” says Mr Thande.