South Africa opens door to M&A into Africa

South Africa remains a key entry point for investors looking to expand into Africa. Its established financial services sector, constitutional framework and independent judiciary continue to support investor confidence, even as dealmaking conditions shift.

M&A appetite has been shaped by a range of structural pressures: geopolitical uncertainty, regulatory change, economic stagnation, higher interest rates and elevated unemployment. Electricity constraints, rail and port inefficiencies and the implications of grey-listing have further influenced investor behaviour. However, the same conditions have generated opportunities in areas such as decentralised energy and operational turnaround strategies.

Businesses operating in emerging markets continue to refine portfolios through smaller, strategic transactions rather than large-scale acquisitions. Regulatory reforms, including steps toward energy sector deregulation and enhanced anti-money laundering rules, are beginning to support greater transactional predictability. Amendments to the Companies Act aimed at improving certainty and disclosure are also reshaping deal planning. While exchange controls still apply, they typically influence structuring rather than block transactions outright.

African transactions increasingly require engagement with multiple competition regulators, with growing coordination between authorities. In South Africa, merger assessments continue to focus heavily on public-interest considerations. Conditions related to ownership, including employee share ownership plans, are becoming more common. Recent exemptions in sectors such as energy have opened space for collaboration between local and international operators in limited circumstances.

Delistings from the Johannesburg Stock Exchange accelerated in 2023, reflecting trends toward take-privates and leveraged buyouts, which are expected to continue. Although regulators generally manage approvals efficiently, capacity constraints can delay certain matters. South Africa’s upcoming national elections add a layer of unpredictability to the broader investment climate.

• Investors may benefit from scenario planning around regulatory timelines, public-interest conditions and infrastructure-related operational risks.
• Local partnerships, energy transition strategies and supply-chain resilience are increasingly central to deal evaluation.
• Buyers and sellers should anticipate more granular scrutiny of ownership structures and long-term socio-economic commitments.