Africa Q1 deal activity hits four-year low but foreign firms step up expansion plans
As law firms including White & Case and Dewey & LeBoeuf step up their links with Africa, new research shows that, far from escaping the recession, Q1 was the worst quarter for deal activity in the continent for the last four years.
May 07, 2009 at 12:58 AM
3 minute read
Dewey and White & Case gear up to handle projects work in Africa but M&A stalls
As law firms including White & Case and Dewey & LeBoeuf step up their links with Africa, new research shows that, far from escaping the recession, Q1 was the worst quarter for deal activity in the continent for the last four years.
Figures produced by Mergermarket for Legal Week show that deal activity has been dropping steadily since last year, with total deal values falling to £3.6bn during Q1 2009, down from £9.6m in Q3 2008 and £5.6bn in Q4.
The value, which contrasts with £5.3bn for Q1 2008, is the lowest for a single quarter since 2005 and, with just 43 deals, it also represents the lowest deal volume since 2005.
By comparison, African M&A activity peaked for both value and volume during the last quarter of 2007, with 111 deals worth £17.7bn.
The figures come as both Dewey & LeBoeuf and White & Case pledge to expand in South Africa over the next year. Dewey is preparing to relocate London-based projects partner Ben Donovan to Johannesburg, as part of a drive to grow the office from eight to around 15 lawyers, with local hires planned.
White & Case, meanwhile, is changing its Africa strategy altogether – moving to serve the continent from South Africa rather than Europe. As part of its plans, it will grow Johannesburg from nine lawyers to between 15 and 20, with several finance partners expected to move from London later this year.
London projects partner Philip Stopford, who is jointly responsible for the Africa initiative, told Legal Week: "We are looking at how we can service more of Sub-Saharan Africa out of Johannesburg. Looking at the practice from a projects perspective, there is a lot of activity in Africa – enough to keep at least 15 lawyers busy at any given time."
The US firms' expansion comes as Denton Wilde Sapte formally launched its exclusive relationship with Johannesburg-based Glyn Marais – the 12th member of its Africa network – this week. The UK law firm has also resolved issues with Tanzanian ally Mkono & Co.
Eversheds, which entered South Africa through a tie-up last April with 60-partner Routledge Modise, has also gained an enlarged presence in the region.
Despite the expansion of those firms named above, most City firms still service Africa from Europe and have no plans to change this. Linklaters Africa desk co-head Charlie Jacobs (pictured above) said: "If we have a prolonged recession, Africa is not immune to that. I am happy to see international law firms waking up to Africa as a region but in some ways many have timed it badly and missed the boom over the past 10 years, in areas such as mining and telecoms."
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