MANAGING FCPA RISKS IN EMERGING MARKET M&A DEALS
RC: Could you outline the level of M&A activity that has taken place in emerging markets over the past year or so? To what extent are overseas companies actively assessing these markets for new investments and business opportunities?
Waligora: Barring certain exceptions, armed conflict and terrorism, policy uncertainty, macroeconomic instability and inadequate legal systems have historically tainted foreign investors’ perceptions of emerging markets as investment destinations. However, Africa, with its high growth rates, burgeoning population, growing middle class, perceived improved political and macroeconomic stability and vast tracts of arable land and attractive geology, became increasingly attractive to foreign investors, with foreign direct investment inflows to the continent increasing by 22 percent between 2010 and 2014. This trend ceased with the end of the commodities ‘super-cycle’, and deal flow into Africa has seen a decline in 2015 and 2016. While 2016 has seen a rebound in certain commodities, the level of investment into emerging markets has been more selective.
Osagie: Post the 2008 financial crisis, companies have continued to explore M&A activity in emerging markets. Most global companies still see this as a growth area, especially in industries such as telecommunications and payments. In addition, as technology helps businesses grow closer, the appetite within most global companies to invest in emerging markets has, in turn, continued. Many commentators recognise that existing markets are reaching saturation or optimum levels.
Apr-Jun 2017 Issue
Baker & McKenzie LLP
Daimler Financial Services Mexico
KPMG South Africa