Despite market deal volumes being down by nearly a third for Africa mergers and acquisitions (M&A) in 2016, international law firm Clifford Chance saw an increase in M&A instructions in Africa in the same period.

The power sector was particularly active in Africa in 2016, with Clifford Chance acting on almost twice as many deals in the sector as in the previous year. Other sectors which saw significant growth were agribusiness and education, with performance in financial services remaining strong.

There was also a noticeable continental deal shift from west to east Africa, where Clifford Chance advised on 50% more deals than in the previous year. While concerns over FX risk and an economy adjusting to a sustained period of low oil prices dampened appetite for M&A in Nigeria, Kenya and other east African jurisdictions became more favoured investment destinations.

“Delivering deals in difficult markets requires investors to be creative in their approach to agreeing and structuring transactions. We are seeing an increased use of bespoke purchase price mechanisms to protect against key risks and to bridge valuation gaps,” said Spencer Baylin, Clifford Chance global head of emerging markets M&A. said:

“Other risk mitigation strategies include investing in countries perceived to be regional hubs through which growth in nearby economies can be accessed, and establishing multi-jurisdictional platforms to build scale and a natural hedge against FX and individual country risk,” he added.

The shift in focus to the east was echoed by Nicholas Hughes, head of Clifford Chance’s east Africa practice. Speaking last week from the Risk and Raising Capital 2017 conference in Nairobi, he commented: “Multiple years of significant economic growth have made Kenyan companies operating in many sectors appealing targets for international private equity houses.

“Despite some high profile bank failures in the region, businesses active in the insurance and broader financial services sector continue to attract new capital. And a surge of investment in off-grid solar companies has cemented east Africa’s reputation as a global leader in this rapidly growing industry.”