This as initial public offering (IPO) and mergers and acquisitions (M&A) deals are predicted in 2019 with a high-level industry conference to take place in Cape Town late next month.
South Africa is among the continent’s countries that are being eyed by investors with huge appetite for Africa and that have grown their investor valuations markedly in Africa. This coincided with news that TMT infrastructure, M&As and fundraising in Africa was forecast to continue growing this years.
Experts welcomed the news with open arms, saying it presented a great opportunity for the country as it, along with Madagascar and Kenya, are set to be the main beneficiaries of the deals.
Ian Jacobsberg, a partner at Hogan Lovells, said this kind of investment was important for the country’s economy.
“An injection of capital of this size and nature can only be seen as a boost for the TMT sector in South Africa, and a vote of confidence at a time when it is most needed. It represents an opportunity for South Africa to capitalise on increasing international demand for technology and communications services, on the back of the growing virtual and online economy,” Jacobsberg said.
South Africa’s fortunes were likely to be further boosted as the country would play host to influential leaders from the largest TMT firms, investment banks and investors at the annual TMT Finance Africa Conference to be held in Cape Town on 28 March. The leaders at the exclusive event were expected to discuss and assess the latest investment opportunities that South African TMT players could exploit.
According to TMT Finance, transactions for the year would exceed $10 billion, which it linked to increasing deal flow across the region and appetite for the continent from global industry and investors.
The next 12 months were likely to see many floating or consolidating the sector as part of clearing the playing fields for deals. Likely beneficiaries of the process were Africa’s national operators, including Towerco of Madagascar and Wananchi of Kenya, which were already making preparations for investments while South Africa’s regional subsea cable giant, Seacom, and Nigeria’s MainOne were weighing up sale and investment options.
TMT Finance said it expected 2019 to be a record year for investment and M&A deals in TMT infrastructure in Africa with many large deals planned, particularly by telecoms infrastructure providers looking to make public flotations to tap into public investment fund appetite and fuel further growth plans. It cited, among other things, leading regional African digital and mobile telecom infrastructure operators such as Liquid Telecom, IHS Towers, Eaton Towers and Helios Towers Africa, all of which had been hiring investment banks to arrange for IPOs.
But Jacobsberg warned about graft and investor attitudes being the likely hurdles for smooth investments.
“However, one cannot escape the elephant in the room, being corruption and the perceptions around it, and from which the technology and communications sector has not been insulated. This may be one of the reasons that, despite deals such as Berkshire’s investment in Teraco, and a more sophisticated and developed IT industry than most, South Africa is lagging behind some other African countries in its apparent attractiveness to investors.”
This couldn’t have come at a better time for President Cyril Ramaphosa, who has been lobbying international investors to come to South Africa to boost the country’s economy, which was damaged by nine years of corruption and political mismanagement by his predecessor, Jacob Zuma.
Ramaphosa appointed investment envoys in his attempt to raise a $100 billion investment into the country.