Canadian explorer Africa Oil’s sale of its Kenyan assets is estimated to be one of Africa’s largest deals of 2015 according to a Thomson Reuters/Freeman Consulting report.
The annual investment banking analysis for sub-Saharan Africa said the part sale of the Kenyan and Ethiopian assets, whose value was not publicly disclosed, is the ninth biggest deal and is valued at Sh85 billion.
Africa Oil has entered into an agreement with Danish firm Maersk to sell part of its Kenyan and Ethiopian oil blocks.
Under the agreement Maersk is to buy a 25 per cent stake in all of Africa Oil’s Kenyan based-blocks and an equal 25 per cent stake in the Ethiopia Rift Basin block and a 15 per cent in the Ethiopia South Omo block.
The deal, which is being handled by JP Morgan and BNP Paribas SA, is yet to be completed but the energy ministry gave the go ahead for the sale early this month.
The Africa Oil/Maersk deal is the third largest in the energy sector after the sale of Angola oil block interests to local firm Sonangol EP for $1.7 billion (Sh170 billion) and the $1.1 billion (Sh111 billion) sale of an oil mining lease by Nigerian National Petroleum Corporation to Eroton Group.
The largest deal in sub-Saharan African was the $22.6 billion (Sh226 billion) reverse takeover transaction of South Africa’s Steinhoff International Holdings NV by Dutch-based Genesis International Holdings NV.
The report says that the overall value of reported mergers and acquisitions (M&A) in Africa significantly increased in 2015.
“The value of announced M&A transactions with any sub-Saharan African involvement reached $66.7 billion (Sh6.7 trillion) for 2015, 73 per cent more than the value registered during 2014,” said Thomson Reuters Africa managing director Sneha Shah.
The report looked at M&A activity that involved foreign companies buying African firms (inbound deals), transactions between African firms (inter Sub-Saharan Africa) and African firms that bought companies (outbound deals).
Kenya’s was third behind South Africa and Nigeria in inbound deal activity accounting for three per cent of all transactions.
Analysts expect more deals with the new companies law that is expected to ease business.
“On September 11, 2015, a new Companies Act was signed into law, spelling a raft of changes which, by and large, presents progressive reforms on matters pertaining registration, management and operation of firms especially for small and medium sized domestic investors.
How this translates into benefits for the investor community will be one of the key areas of focus in 2016,” says an outlook report by StratLink Africa.
Business Daily, Kenya
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