What every investor and dealmaker should know about doing deals in Nigeria

The KPMG report, “Doing deals in Nigeria 2019; Key insights from dealmakers” surveyed experience senior business executives and local advisors having completed acquisition or investment in the country in the last four years.

According to the report, Nigeria, though not without challenges, has the right kind of characteristics for acquisition-minded corporates for its consumer market and growing population.

In the last three years, financial services and consumer deals make 36% and 28% of Nigerian M&A deal value by sector respectively.

“Nigeria is turning out to be an investment haven,” an EMEA based director for a TMT corporation said in the report. “Investors see long-term opportunities in the country and these investors can start from the grassroots level moving vertically and growing fast.”

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Hurdles of doing deals in Nigeria

The report also states that 86% of respondents see legal and regulatory policies among hurdles facing completion of their most recent Nigerian deals. “66% of the challenges are compliance requirements which is one of the biggest challenges to investing in the country.”

The principal legislation regulating M&A in Nigeria is the Investment and Securities Act 2007, the Securities and Exchange Rules and Regulations and the Companies and Allied Matters Act.

Deal opportunities in Nigeria

KPMG also highlights deal opportunities within payment processing businesses, fintechs and ancillary service providers as the country moves from a cash to a digital economy.

“The insurance space is also ripe for investment, with big names turning to Nigeria for deals. For instance, Germany’s Allianz and the UK’s Prudential have both recently made acquisitions of Ensure Insurance and Zenith Life Assurance Company respectively, with Allianz viewing Nigeria as a “high-potential market” with “promising demographics,” the report states.

Deals in Nigeria

In an M&A tracking data by BusinessDay, the market recorded an 11-year high of $1.7 trillion in 2018, making Nigeria one of the most compelling M&A markets in Africa today.