Citigroup Inc. said consumer-focused companies are the most active industry for mergers and acquisitions in Africa as trade increases and the continent’s middle class grows.
“People see big trade blocs, increasing incomes and a rise in urbanization,” Miguel Azevedo, head of investment banking in Africa for Citigroup, said Friday in an interview at the World Economic Forum on Africa.
The number of middle-class households in sub-Saharan Africa has tripled since 2010, according to Johannesburg-based Standard Bank Group Ltd. Companies from outside the region that have been left behind in gaining a share of this retail market will have to do deals to catch up, Azevedo said.
“Nestle, Unilever -- they’re already here, but others are not and the only way to get in is by buying something.”
For Citigroup’s investment bankers, Nigeria is the top country for mergers and acquisitions followed by Kenya and then Tanzania, according to Azevedo. Ethiopia, with a population of 94.1 million and economic growth exceeding 8 percent is also getting increasing attention.
“Ethiopia is the big unknown, but it will be a massive opportunity when it opens.”