Enter the Chinese

By Kevin Godier

Posted on Monday, 25 May 2009 09:32

A significant volume of merger and acquisition (M&A) activity is expected in Africa’s hydrocarbons sector in the second half of the year, according to one of the specialist firms that handled about half the deals in the African oil sector last year.

“Africa remains very important and appeals to all the major players in the world, even in the current economic environment”, says Doug De Filippi, a director of Scotia Waterous, the oil and gas M&A division of Scotia Capital. “The first half of 2009 was affected negatively by events in 2008, but we expect a strong second half”, he adds. The unit has been helping PA Resources to sell assets in Equatorial Guinea and the International Finance Corporation to sell holdings in Côte d’Ivoire and Egypt.

A combination of demand and supply informs his prediction. The Chinese government “is taking a good hard look now,” De Filippi observes, adding that “the Chinese may just be warming up on the Verenex deal in Libya”, where Scotia Waterous was financial advisor to China National Petroleum Corporation.

On the supply side, a range of mid-sized companies have debts to service and can see a sales window. “Asset values in Africa have dropped much less than elsewhere in the world”, he says.

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