Mergers and acquisitions in the technology and telecommunications sectors in Africa and the Middle East will more than quadruple in 2018 compared to 2017, according to a new forecast from multinational law firm Baker McKenzie.
The firm’s new Global Transaction Forecast, developed in association with Oxford Economics, shows that M&A in technology and telecoms in Africa and the Middle East was valued at US$1.2 billion in 2017. This is expected to surge to $5.9bn in 2018 and a further $5.9bn in 2019, before decreasing to $3.9bn in 2020.
A more positive global economic outlook, the expansion of technology across industries, investment from emerging markets and strong corporate balance sheets are the key factors in driving investment in tech M&A around the world, including in Africa, Baker McKenzie said.
Darryl Bernstein, the South African head of the company’s technology, media and telecoms practice, said the predicted rise in M&A will be driven by Africa’s growing telecoms infrastructure and access to online services and platforms.
“Increased local demand for innovative products, services and solutions is driving offshore telecoms and technology companies to target opportunities in Africa,” Bernstein said. “The growing financial services sector has also seen domestic banks make significant investments in technology to advance their innovation agenda.”
African tech companies are also targeting offshore investments in companies that will deepen their access to new technologies, markets and talent, he added.
“The expansion of emerging technologies across industries, including agribusiness, automotive and of course fintech, will also drive M&A activity as we expect to see more cross-sector deals involving technology.”
Deal activity in the technology and telecoms sectors is likely to accelerate. In 2018, M&A activity in the tech and telecoms sectors is forecast to rise significantly across all regions. Baker McKenzie said. North America will top the list with transactions totalling $243bn, followed by Asia Pacific with $108.3bn, Europe with $106bn and Latin America with $4.9bn.
“The rapid growth of innovation in artificial intelligence, cloud computing, cybersecurity, and big data is driving anticipated deal activity,” said Matthew Gemello, an M&A partner at Baker McKenzie based in Palo Alto.
“Hybrid sectors represent the growing convergence of traditional industries and technology as companies battle to remain competitive,” said Anne-Marie Allgrove, global chair of Baker McKenzie’s Global TMT Industry Group based in Sydney. “When you couple the rapid pace of innovation and continued push for vertical integration, it creates a recipe for increased M&A activity.” — (c) 2018 NewsCentral Media
