Merger and acquisition (M&A) activity in North Africa has been on the rise in recent years, driven by economic reforms, privatization initiatives, and sector liberalization across the region. Major deals are taking place in industries like banking, telecommunications, energy, and real estate.
This article provides an overview of the most notable M&A deals that have been announced or completed in North Africa in the past year, key trends driving deal activity, and an outlook on expected M&A activity in 2023.
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Notable M&A Deals in North Africa in 2022
Some of the biggest M&A deals that took place across North Africa in 2022 are highlighted below:
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UAE’s First Abu Dhabi Bank acquires Egypt’s Bank Audi – In May 2022, First Abu Dhabi Bank (FAB), the largest bank in the UAE, acquired Egypt’s Bank Audi in a deal valued at $742 million. This represents FAB’s entry into the Egyptian market.
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Morocco’s Banque Centrale Populaire acquires majority stake in Bank Of Africa’s Moroccan subsidiary – Banque Centrale Populaire (BCP), Morocco’s second largest bank, acquired a 67.5% controlling stake in Bank of Africa’s Moroccan subsidiary for $344 million in May 2022. This deal consolidates BCP’s position in the country.
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UAE’s Etisalat acquires majority stake in Egypt’s Vodafone – In May 2022, Emirates Telecommunications Group Company (Etisalat), the UAE’s telecom giant, acquired a controlling stake in Egypt’s Vodafone for $2.39 billion. This represents one of the largest deals in the Egyptian telecom sector.
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UAE firm Alpha Dhabi acquires 25% stake in Al Qudra Holding – Abu Dhabi-based investment firm Alpha Dhabi acquired a 25% stake in Al Qudra Holding, one of the largest private healthcare providers in the UAE, for $545 million in June 2022.
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Saudi Arabia’s SIDF acquires 50% stake in Egyptian state shipping firm – The Saudi Industrial Development Fund (SIDF) acquired 50% stake in the Egyptian Navigation Company (ENC), Egypt’s largest shipping company. The deal was valued at over $90 million.
Notable M&A Deals in Key North African Countries
Egypt
- First Abu Dhabi Bank (FAB) acquires Bank Audi Egypt for $742 million
- Etisalat acquires majority stake in Vodafone Egypt for $2.39 billion
Morocco
- BCP acquires 67.5% stake in Bank of Africa Morocco for $344 million
Algeria
- Algeria (through state fund Fonds National d’Investissement) acquired Ottoman bank for $64 million
- Telecom Algeria purchased telecom operator Djezzy for $2.64 billion
Tunisia
- Qatar’s Utico acquires 40% stake in Carthage Cement for $42 million
- Attijari Bank Tunisie acquired The International Bank of Tunisia for $130 million
Libya
- Libya Africa Investment Portfolio acquires 49% stake in LAP Green Networks for undisclosed amount
Key Drivers of M&A Activity in North Africa
There are several key factors that have been driving increased merger and acquisition activity in North Africa in recent years:
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Economic reforms and liberalization – Many North African countries have been undertaking economic reforms, including loosening restrictions on foreign ownership in certain sectors. This has made the region more attractive for cross-border M&A activity.
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Privatization of state-owned enterprises – Privatization drives in Egypt, Algeria, Morocco, and Tunisia have opened up opportunities for acquisitions of state-owned companies across sectors like telecoms, banking, manufacturing and energy.
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Banking sector consolidation – Reforms and need for capital has led many smaller banks to consolidate through mergers. Larger banks are also acquiring smaller players to increase market share.
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Telecom sector deregulation – Relaxing of foreign ownership restrictions has enabled deals like Etisalat’s acquisition of Vodafone Egypt and seen increasing interest from Gulf firms.
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Energy sector liberalization – Egypt’s economic reform program involves liberalizing the natural gas sector which has attracted interest from foreign energy companies.
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Growing private equity interest – PE firms have been attracted by strong demographics, consumer growth and opportunities across consumer, healthcare, fintech and other sectors.
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Geographic proximity and cultural ties – North Africa’s proximity and established ties with Gulf countries has been a key driver of cross-border M&A interest from UAE, Saudi and Qatar based entities.
Outlook for M&A Activity in North Africa in 2023
The outlook for merger and acquisition activity in North Africa in 2023 remains quite positive driven by the above-mentioned trends. Here is what to expect:
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More consolidation expected in the crowded banking sectors of Egypt, Morocco and Tunisia as regulators push for consolidation.
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Continued dealmaking by Gulf companies looking to invest in high-growth sectors across North Africa. Fintech, healthcare, consumer products are sectors attracting Gulf investment.
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Ongoing privatization drives in Egypt, Tunisia, Morocco and Algeria to open up opportunities in telecoms, energy, manufacturing and real estate.
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Regulatory reforms in Egypt focused on PPP schemes and state asset sales to continue driving foreign acquisitions.
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PE interest likely to remain strong for consumer sectors benefiting from the region’s favorable demographics and rising consumer class.
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More cross-border energy M&A expected as countries unlock oil and gas assets to meet rising domestic and export demand.
Some of the largest deals we may see in 2023 include:
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Privatization of state-owned banks, manufacturing and energy assets in Algeria
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Continued telecom consolidation involving Orange and Etisalat
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Acquisitions in Egypt’s newly liberalized natural gas sector
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PE deals in consumer, healthcare and financial services industries
Comparing M&A Activity in North Africa vs Other Emerging Markets
North Africa M&A Activity vs Other Regions:
| Region | 2021 Deal Value | Key Sectors | 2022/23 Outlook |
|---|---|---|---|
| North Africa | $13.7 billion | Banking, telecom, energy | Positive – continued economic reforms to drive dealmaking |
| Southeast Asia | $166 billion | Tech, financial services, consumer | Strong – tech investment and consumer M&A to continue |
| Latin America | $136 billion | Technology, infrastructure, energy | Steady cross-border inbound interest |
| Central & Eastern Europe | $83 billion | Financial services, healthcare, tech | Solid – privatization and digital transformation driving deals |
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North Africa M&A activity is on the rise but still lags larger emerging market regions like Southeast Asia and Latin America in total deal value.
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Banking, telecoms and energy account for a large share of North African deals compared to tech and financial services in other regions.
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Outlook remains positive for North Africa supported by ongoing structural reforms, while pandemic recovery and digital transformation trends continue driving M&A elsewhere.
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Privatization has been a key driver of deals in North Africa relative to overseas expansion and tech investment in other regions.
Notable North Africa M&A Deals by Key Sectors
Telecoms
| Acquirer | Target | Deal Value | Year |
|---|---|---|---|
| Etisalat (UAE) | Vodafone Egypt | $2.4 billion | 2022 |
| Vodafone Group | Vodacom Group’s Egypt Unit | $2.7 billion | 2017 |
| Emirates Telecommunications Group | Morocco’s Etisalat Maroc | $582 million | 2014 |
Banking and Financial Services
| Acquirer | Target | Deal Value | Year |
|---|---|---|---|
| First Abu Dhabi Bank | Bank Audi Egypt | $742 million | 2022 |
| Attijariwafa Bank | Société Tunisienne de Banque | $484 million | 2018 |
| Banque Centrale Populaire | Bank of Africa’s Morocco Subsidiary | $344 million | 2022 |
Energy
| Acquirer | Target | Deal Value | Year |
|---|---|---|---|
| Taqa Arabia | AES Electric Distribution Activities in Egypt | $90 million | 2020 |
| Kuwait’s Al Kharafi Group | Libya’s Brega Petroleum Marketing Company | $200 million | 2009 |
| Schlumberger | Egypt-based Oilfield Services Company Malvern | $220 million | 2010 |
Real Estate
| Acquirer | Target | Deal Value | Year |
|---|---|---|---|
| UAE’s Aldar Properties | Egypt’s SODIC | $409 million | 2019 |
| UAE’s Emaar Properties | Egypt’s Juhayna Integrated Community | $105 million | 2005 |
| UAE’s Emaar Misr | Egypt’s Amwaj Islands | $856 million | 2006 |
Frequently Asked Questions
Q: Which country has seen the most M&A activity in North Africa recently?
A: Egypt has seen the highest number and value of deals in North Africa in recent years, driven by its economic reform program and privatization drive. Morocco has also seen steady deal activity led by banking M&A.
Q: Which sectors have attracted the most M&A interest in North Africa?
A: Telecoms, banking, and energy have seen the most M&A interest and deal activity historically. More recently, real estate, healthcare, and consumer goods have also seen growing investor interest.
Q: Are cross-border deals or domestic M&A more common in North Africa?
A: Cross-border M&A has played a major role, with active interest from buyers in the Gulf region. Many recent flagship deals have involved UAE or Saudi acquirers. But domestic consolidation is also continuing, especially in banking.
Q: What are the main trends driving M&A activity in North Africa?
A: Privatization initiatives, banking sector consolidation, economic reforms attracting foreign investment, deregulation enabling deals in telecoms and energy, and private equity interest are the main trends.
Q: Which North African countries have privatization programs driving M&A?
A: Egypt, Algeria, Tunisia, and Morocco have all undertaken varying privatization drives over the past decade involving everything from banking and telecom assets to manufacturing, energy and real estate.
Q: What are the growth prospects for M&A in the region moving forward?
A: The outlook remains strong supported by liberalization policies, desire for infrastructure development, and attractive demographics. Continued reforms and privatization progress will be key determinants of future M&A momentum.
Q: How have geopolitical developments impacted M&A activity in North Africa?
A: Political instability and conflict have dampened M&A activity in some North African countries at times. For example, the civil war in Libya led to a slowdown in deals. However, Egypt has remained resilient despite unrest, while Morocco and Tunisia have been more politically stable. Going forward, peaceful resolutions of conflicts could unlock more deal making.
Q: What regulatory approvals are required for M&A deals in North Africa?
A: Approvals are required from regulatory bodies including central banks, stock exchange authorities, telecom and competition regulators, and other sector-specific agencies. Rules on foreign ownership in sensitive sectors can also impact deals. Navigating regulations can be challenging but reforms have eased restrictions.
Q: Are there any common post-merger integration challenges faced in North Africa?
A: Integration challenges can include aligning corporate cultures across borders, managing labor relations sensitively, and consolidating operations. Having local partners familiar with regulations and business norms can help acquirers navigate integration.
Q: How could improvements in regional integration impact M&A?
A: More regional cooperation and integration initiatives in North Africa, as seen in trade partnerships, could further boost cross-border investments and deal making. Easing restrictions on financial flows and harmonizing regulations would also support M&A.
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Conclusion:
The M&A environment in North Africa is poised for continued growth in 2023 and beyond. Key factors underpinning future dealmaking momentum include ongoing economic reforms and liberalization agendas, sector privatization programs, banking sector consolidation needs, strong investor appetite from the Gulf, and rising private equity interest in consumer-oriented sectors.
However, risks such as policy uncertainty, foreign exchange volatility, geopolitical frictions, and social tensions in some markets could weigh on investment. Overall, North Africa remains an attractive region for M&A compared to other emerging market regions, supported by favorable demographics, natural resource endowments, and strategic geographic positioning.
Dealmakers that can navigate the intricacies of local regulations and business practices while tapping into cross-border financing stand to benefit most from continued deal opportunities. Successful M&A will also depend on careful post-merger integration that is sensitive to local cultures and concerns. With prudent strategy and execution, corporations, investors and advisors can capitalize on North Africa’s promising mergers and acquisitions landscape in the years ahead.
