The recent cross-deal between Dutch consumer Internet conglomerate Prosus and Naspers, its South African parent company, has boosted M&A transactions in Sub-Saharan Africa by $44.7 billion during the first nine months of 2021, according to a recent report by Refinitiv.
Refinitiv is a U.S.-British global provider of financial market data and infrastructure. It revealed that the total value of announced M&A deals with any Sub-Saharan African involvement reached $78.3 billion during the first nine months of the year.
Compared with last year’s figures, the value of M&A transactions in 2021 is more than four times the figure recorded during the same period last year and the highest first nine-month total since Refinitiv began tracking mergers and acquisitions in 1980.
Earlier this year, Prosus and Naspers concluded a deal that sets up a cross-holding structure and moves majority ownership of their international assets to Amsterdam.
The cross-swap deal valued at $44.7 billion resulted in Naspers owning a 57-percent majority stake in Prosus, down from 73.2 percent. At the same time, Prosus took up a 45.33-percent stake in its parent company.
Bob van Dijk has been the CEO of Naspers since 2014 and the CEO of Prosus since 2019. He said the transaction increases the size of Prosus’ free float and more than doubles its ownership position in the group.
However, investment managers argued that the deal could add to the complexity of Naspers and Prosus share structure without creating the implied value.
Van Dijk said the voluntary share exchange will deliver immediate and long-term value creation for shareholders.
While the number of deals increased by eight percent over last year’s figures to a three-year high of 584, M&As involving Sub-Saharan African targets reached $61.8 billion, again lifted by the share-swap deal to a record nine-month total.
Due to the swap deal, Morgan Stanley and Goldman Sachs Bank Europe held the top spot in the ranking of financial advisors for deals with any Sub-Saharan African involvement in the first nine months of 2021.
Since its establishment in 1915, Naspers has transformed into a global consumer Internet company and one of the largest technology investors in the world.
The group owns a beneficial 28.9-percent stake in Tencent, a Chinese Internet and media firm, through South African billionaire investor Koos Bekker.
Its stake in the Chinese firm has declined by more than 15 percent since the start of the year owing to a crackdown in China, as Chinese authorities move to regulate and control tech companies to protect customer information and curb anti-competitive practices.
Prosus shareholders benefit directly from the performance of Tencent shares through the cross deal. Tencent offerings in China include the instant messengers Tencent QQ and WeChat.
It also owns most of China’s leading music services platform Tencent Music, with more than 700 million active users and 120 million paying subscribers. In addition, Tencent’s WeChat Pay handles nearly 40 percent of the country’s mobile payments.
