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International Investors Looking At South Africa Tech Companies

International Investors Looking At South Africa Tech Companies

Law firm Baker McKenzie has released its latest quarterly Cross-border M&A Index, showing a massive drop in the number of inbound M&A deals across Africa and South Africa – but there’s a positive spin for the SA tech sector.

According to the report, there were 17 inbound M&A deals in Africa in the second quarter (Q2) of 2017 – a 48 percent drop from 33 deals in Q2 2016.

The total deal value for inbound deals amounted to US$780 million, decreasing by 83 percent year-on-year and 88 percent on a quarter-by-quarter basis.

From Business Tech.

According to Morne van der Merwe, managing partner of Baker McKenzie, almost half the continent’s M&A activity flows through South Africa, meaning that recent local developments would have a significant negative knock-on effect in Africa.

“Foreign Direct Investment (FDI) in South Africa has decreased and this will continue until the local investment climate stabilizes,” he said.

“Due to the credit ratings downgrades, the cost of raising capital for acquisitions has become more expensive, making deals more difficult. In addition, the Rand has been one of the most volatile currencies in 2017 and this volatility has suppressed deal appetite.”

“These factors, combined with recent political instability and uncertainty, have resulted in a perception in the market of increased risks of doing business in South Africa. Global players are finding more attractive investment destinations elsewhere.

Read more at Business Tech.