A senior Investment Banker at Stanbic Bank Ghana is predicting a rise in Mergers and Acquisitions (M&A) activity in the country given the increasing emphasis on local content across sectors in the country.
Randolph Rodrigues, who heads the M&A and Financial Advisory desk at Stanbic Bank, is therefore urging financial institutions in the country to show leadership in advisory services to benefit the development of the nation.
�The renewed quest for the institution of local content requirements across industries is expected to drive a wave of M&A activity, with larger foreign-owned enterprises seeking partnership opportunities with indigenous operations to continue to grow within the legal framework of their respective industries. Banks are well placed to lead the way in advisory services.�
He said as Ghana�s economy continues to expand and mature, more and more domestic institutions should develop aspirations or potential to expand their reach beyond Ghana�s borders and M&A will be key in securing for a broader geographic footprint.
�Most firms that assume debt in their capital structures will borrow money, refinance, restructure and retire loans multiple times during the life of the business; however a typical firm will only execute one M&A transaction � in which it engages a financial or strategic partner; it is therefore critical to solicit capable advisors.
�M&A is a complicated product, and it should be handled by institutions that have this line of business as a core competency. Financial advisors are required to guide their clients through an intricate and detail-intensive process with tremendous impact on the future of clients� businesses and limited to no room for error or failure,� he said.
Even though numerous financial entities list �investment bank� or �corporate finance advisory� among their services, an educated survey of the financial services sector shows that a majority of the transactions executed in the market have been advised on by a select group of financial institutions.
Aggressive growth in the financial sector over the past decade has spurred meaningful M&A activity with Ecobank acquiring Trust Bank and Access Bank merging with Intercontinental Bank. Mr. Rodrigues believes more will soon follow, with future potential increases in capitalisation requirements and general industry competition expected to lead to further consolidation in the sector.
�Further deregulation of the economy will likely entail additional privatisations or government divestment of assets in which it holds non-strategic stakes which presents another avenue for M&A�, he said.
Analysts believe the positive press on Ghana over the past decade that highlights its open economy and stable political climate has spurred growth and sustained foreign investment in Ghana. This coupled with the broad recessions across the developed world has driven substantial interest in Ghana within the Africa-focused investor community.
Recent M&A incursions into the Ghanaian market include major deals such as UK-based DPI�s recent investment in CAL Bank, Duet Private Equity�s investments in agriculture processing and beverage production operations in Ghana and South Africa-based Vantage Capital�s investment in Genser Energy, an independent power producer.
Other notable transactions involving strategic investors include:
� The acquisition of FanMilk International by Abraaj (middle-east based private equity firm with a strong presence in sub-Saharan Africa through its prior acquisition of Aureos Private Equity Fund) and Danone (a global leader in the dairy, baby food and water), in the fast-moving consumer goods sector. Stanbic was the exclusive financial advisor to Danone.
� The acquisitions of Provident Life and Express Life by Old Mutual and Prudential Plc. respectively, in the financial services sector
� The acquisition of Benso Oil Palm Plantation by Wilmar Group, in the agriculture space; and
� The merger of Keegan Resources and PMI Gold in the mining sector.
M&A is an important arrow in the quiver of any business at any stage of development; whether start-up or mature and established. We believe that a discussion around growth strategy is critical for all business and yields significant benefits. As a universal bank with a full-service Corporate and Investment Banking platform, Stanbic is equipped with the capabilities to support such ambitions and is eager to engage in such meaningful dialogue with existing and prospective clients.
Stanbic, with its global presence and strong established multi-disciplinary investment banking offering, is strategically positioned to support companies through this process. In Africa, the Bank provides a comprehensive suite of solutions including M&A advisory, Diversified lending and Debt capital markets solutions, Equity capital markets advisory (including private placements, IPOs and associated transactions), Project finance, Real estate finance and Structured trade and commodity finance, across the continent to a diverse range of clients.
Source: Prince Obimpeh/Peacefmonline.com/Ghana
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