While the deal pipeline has slowed in the past year, business law firm Cliffe Dekker Hofmeyr (CDH) says that, notwithstanding the current volatility, there are opportunities for investors who take a longer-term view.
“The weakness in the currency is not all negative as it creates opportunities in the medium to longer term. South Africans have, understandably so, become extremely negative about the economy, government and the country in general, but we are not doing ourselves any favours. If we keep on telling the world that South Africa is no longer an attractive investment destination, then it becomes a self-fulfilling prophecy. Instead, we should be focussing on the positives and assist the country in attracting more foreign investment, which we desperately need,” says Director and National Head of CDH’s Corporate and Commercial practice, Willem Jacobs.
“The message government was trying to get across in Davos recently was that we are open for business and we, as dealmakers in South Africa, need to support that,” says Jacobs.
Jacobs was speaking after CDH had clinched top honours in the DealMakers’ Awards for M&A deal flow for the seventh year running.
The team’s 79 M&A deals in 2015 had a combined value of R178bn. In addition, the firm was ranked first for deal flow and second for deal value in the corporate finance transactions legal adviser tables, having advised on 66 corporate finance deals in 2015 worth R80bn. It achieved fourth place overall in terms of M&A deal value.
DealMakers records every M&A deal and corporate finance transaction entered into by South African listed companies.
Jacobs says that while there is a lot of “doomsday talk” at the moment – and the risk of a further rating downgrade exists - from a merger and acquisition perspective, deals will continue to be done.
“SA businesses understand the need for growth and if this is not going to take place in SA – which is forecast to grow at a paltry 0.7% according to the IMF - then they will look elsewhere,” he says.
“They are likely to see opportunities for mergers and acquisitions in the rest of Africa, Europe, Asia and the Middle East, and we have already seen that happen,” he says.
CDH has won the DealMakers’ deal flow award every year since 2009 and its corporate and commercial practice is committed to using its extensive experience in Africa and South Africa to facilitate transactions and support the growth of industries.
CDH CEO Brent Williams says achieving such a strong performance in the DealMakers league tables for 2015, which follows the firm’s excellent ranking in the Mergermarket tables, was extremely noteworthy.
“We realise conditions are tough and will continue to support our clients by driving and improving innovation around our services,” he says.
CDH was also recently named South Africa’s number one large law firm in the prestigious PMR Africa client research report for the sixth year in a row.
The firm underwent a rebranding last year and has made significant new partner appointments to ensure it expands in line with the needs of its clients.