Marsh records $330mn African deals in 2024

Mergers and acquisitions activity across Africa remained strong last year, with 269 completed deals totaling $12.5 billion. South Africa led the way, accounting for 38 per cent of transactions and 43 per cent of total deal value, followed by Nigeria. Luke Sutton, Head of Transactional Risk for Middle East and Africa at Marsh, discussed the key highlights of the Transactional Risk deep dive report published by his team last week. The report highlighted a modest recovery in 2024 compared to 2023, which was a 10-year low in terms of both deal volume and value. Global M&A volume reached close to $3.5 trillion, with Africa contributing around $12.5 billion. Despite a decrease in volume compared to 2023, there was robust usage of insurance products to mitigate M&A risks, showing an increase in deal complexity and sophistication among parties involved. Sutton noted a 55 per cent increase in quote requests for African M&A transactions in the insurance market, indicating substantial growth over the past two years. The availability of insurance solutions has increased, leading to lower premium costs and enhanced risk management for parties involved in deals. Furthermore, insurers have expanded coverage parameters to adapt to the changing landscape of transactions in emerging markets. Sectors like technology, healthcare, renewable energy, power, and mining, which previously lacked insurance market interest, are now witnessing a shift as insurers identify potential claims and adopt a more meticulous approach to deal-making. Sutton emphasized the importance of reducing transaction friction by improving due diligence processes, contractual agreements, and utilizing insurance solutions to provide recourse for parties involved in M&A deals. He highlighted the convergence of these factors leading to a smoother and more efficient transaction process for buyers and sellers. While inbound and domestic transactions dominate the current M&A landscape in Africa, there is a growing interest in outbound investments from the continent. Although outbound data remains limited, large African corporates and private capital funds with international mandates are showing interest in international expansion and aggressive growth strategies. As sophistication in deal-making grows, the proportion of outbound transactions is expected to increase in the coming years, reflecting a shift towards global market engagement. Sutton's insights point towards a positive outlook for African M&A activity, with the potential for increased cross-border investments and diversified transactional landscapes in the future.