The new year will be one of “cautious opportunity” for mergers and acquisitions (M&A) as prolonged volatility now appears to be stabilising amid a favourable turn in interest-rate cycles, and several sectors look set for renewed consolidation, says Andrew Bahlmann, founder of Deal Leaders International.
Investors were preparing for a year “defined less by broad, exuberant deal-making and more by targeted strategic moves and shifting macroeconomic forces”, Bahlmann told Business Times.
South African business confidence rebounded in late 2025, which matters because M&A pipelines tend to expand when confidence and sentiment improve, particularly if capital cost expectations are easing toward 2026, he said.
In 2025 M&A activity included MultiChoice’s takeover by French entertainment giant Canal+, Vumatel’s acquisition of Herotel and the merger of Vodacom’s fibre business with that of Maziv, the owner of Vumatel and Dark Fibre Africa. Pioneer Group’s acquisition of RFG Holdings, owner of the Rhodes and Bull Brand labels, is expected to be finalised this year.
With private-equity firms and the broader corporate sector sitting on substantial uninvested capital, much of the deal flow is likely to come from buy-and-build strategies, continuation funds and bolt-on acquisitions designed to scale existing platforms
— Andrew Bahlmann
“With private-equity firms and the broader corporate sector sitting on substantial uninvested capital, much of the deal flow is likely to come from buy-and-build strategies, continuation funds and bolt-on acquisitions designed to scale existing platforms. Rather than headline-grabbing megadeals, the environment favours smaller, strategic transactions, particularly in industries where companies are seeking operational efficiencies or accelerated growth,” said Bahlmann.
Private-equity firms expect increased deal activity in Southern Africa in 2026, driven by easing inflation and the expected easing of interest rates.
According to Bahlmann, the energy sector stands out as a clear hotspot. “Africa’s upstream oil and gas sector, buoyed by recent regional discoveries and shifting portfolio strategies among major producers and national oil companies, is expected to generate renewed transactional activity. These deals are often driven by the reshuffling of exploration stakes, divestments by global majors, or regional energy security goals that create openings for new entrants.”
Beyond energy, consumer retail, health care, telecommunications and fintech are all expected to see varying degrees of consolidation. In retail, companies continue to streamline their balance sheets and shed non-core assets, creating space for opportunistic buyers.
“Health-care providers, facing cost pressures and technology investment demands, may seek scale through mergers. Fintechs and telecom operators are likely to pursue regional expansion or partnerships to gain market share in an increasingly digitalised consumer landscape,” he said.
The broader market outlook for 2026 hinges on several macro drivers that could either underpin confidence or introduce fresh volatility, Bahlmann added.
“Monetary policy will be the dominant force. Central banks globally appear to be entering the latter stages of their tightening cycles, and expectations are building for interest-rate easing in major economies.
As funding conditions improve and investor confidence increases, we are likely to see continued strength in logistics, convenience retail and the residential rental market
— Justin Davidson, Anchor portfolio manager
“In South Africa, anticipated rate cuts would reduce funding costs, lift consumer sentiment and support both equity valuations and bond performance. However, any deviation in inflation trends — particularly if energy prices spike — could disrupt this path.”
Commenting on the outlook for the property sector, Justin Davidson, portfolio manager at Anchor, said he expects 2026 to be shaped by a more supportive macroeconomic backdrop, with South Africa entering a period of lower inflation, which creates room for further measured easing in interest rates.
“As funding conditions improve and investor confidence increases, we are likely to see continued strength in logistics, convenience retail and the residential rental market,” Davidson said.
“Industrial logistics, smaller-format convenience retail and select residential are poised to lead performance in 2026. Prime decentralised office nodes in Cape Town, Durban and key Johannesburg hubs are expected to show resilience, supported by a sustained flight to quality.”
Keillen Ndlovu, an independent property analyst, said earnings in the sector were likely to grow 5%-7% in 2026, an improvement from the 4%-6% achieved in 2025. In 2024, earnings contracted 3%-4%.
“As Reits [real estate investment trusts] and property companies start trading closer to net asset value … it makes it easier to do more direct property transactions-acquisitions and to raise more capital,” Ndlovu said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.