Dealmakers are predicting a busy M & A pipeline with a few already mandated on new transactions that could bulge the market in 2016.
Year-to-date deal is currently valued at $1 billion, mostly in private equity deals, undeterred by the sharp economic slowdown in Nigeria and the tumbling global oil prices as well as pressure from foreign exchange restrictions.
“We expect more people to begin to take positions now because of the downturn in the economy,” says a CEO of an investment bank in Lagos who says his firm is currently mandated on two transactions. “This is the time to get bargains. So, I foresee there will be a bit of M&A activities and I see the need for consolidation,” he said.
The known big deals, mostly private equity, already sealed includes the MTN Nigeria’s takeover of Visa Phone in a deal sources say is valued at about $300 million, Coca-Cola’s acquisition of a 40 percent stake in Chi valued at about $400 million and Olams purchase of BUA groups Nigerian milling assets for $275 million.
Sources say the parties involved in one of the banking sector meager deal are nearing agreement, suggesting that the sector will witness some play before the end of the quarter as well.
The partying signs are reinforced by the Central Bank of Nigeria’s (CBN) recent rate adjustment which is already influencing low interest rate environment while presenting opportunities for borrowers to renegotiate terms of their loans and possibly approach the capital market.
The CBN lowered the Monetary Policy Rate (MPR) and the Cash Reserve Requirement (CRR) to 11 % and 20% respectively in November 2015 and left the rates unchanged after its January 2016 meeting in Abuja.
The Nigerian Stock Exchange (NSE) recorded just one initial public offering (IPO) in 2015 down from six equity listings in 2014, data from the bourse shows.
