Grindrod Bank receives award for property deal

MAI is the world's leading mid-market mergers and acquisitions alliance, and is made up of 40 top advisory and investment banking firms operating in 39 countries.

Alliance members collectively accounted for 252 deals last year, totalling US$20 bn (R229 bn) in value.

The MAI Awards cover 11 industry categories, and recognise the most innovative mergers and acquisitions deals concluded worldwide in the preceding year.

Grindrod received the 2009 property industry award for the disposal of a diversified property portfolio worth R1bn for a local corporation.

"As the only member of the alliance in the sub-Saharan region, we're deeply honoured by this award," says Jannie Grobbelaar, Head of Corporate Finance at Grindrod Bank.

"The trading environment over the past year has been extremely challenging, but we believe this has brought out the very best levels of innovation, both at Grindrod Bank and amongst our alliance partners."

SA remains buoyant

In a generally cautious market, mergers and acquisitions have remained buoyant in South Africa, despite recent market pressures.

Local deal volumes increased last year, says Grobbelaar, mainly for two reasons:

"Firstly, mergers and acquisitions have offered many companies the opportunity to achieve the kind of growth they would not have been able to achieve organically in such a recessionary environment and, secondly, they have enabled them to take advantage of strategic opportunities that would not have been available under different circumstances."

Against a backdrop of tight liquidity, more expensive debt, and the impact of the downturn in world markets, this has been an almost counter-intuitive trend.

"Liquidity is, of course, always a factor," says Grobbelaar, "but as the recession started to ease, a number of companies decided to pursue mergers and acquisitions as a strategic objective, either to grow their operational footprint, to take advantage of investment opportunities, or to expand their presence in the international arena.

"In short, these deals were identified as a means with which to secure stability, achieve short-term growth, benefit from increased economies of scale, and create a solid platform for more long-term growth."

Key to sustainable future

As the extreme caution that marked the months immediately after the global financial crisis slowly gave way to guarded optimism, a conviction arose that whatever the challenges might be, well-considered and appropriate action was necessary to ensure a profitable and sustainable future.

"Companies that took stock, assessed the situation carefully, and then took the decision to use a merger or acquisition to strengthen their operations are already starting to show the benefit."

Does that mean the door to this kind of strategic deal has now closed?

"Not at all," says Grobbelaar. "The middle market remains active, and there are still some incredible deals to be had.

"Locally, these are being driven by the recovery of direct foreign investment and the continuing focus on real black economic empowerment.

"We're also starting to feel the influence of Pan-African trade, which is leading to more and more cross-border deals.

"We at Grindrod Bank predict that, as companies become more open to deals now than they were even six months ago, both the volume and value of M&A deals will continue to increase.

"And we're looking forward to working on more challenging and innovative transactions like the deal which won us the MAI Global Deal of the Year Award."