The Middle East and North Africa (MENA) region witnessed a stable M&A market with total deal value by 2023 reaching $86 billion, indicating an increase of 4 percent over the previous year. previous year, a report showed Monday.
According to the Hey In the Mena M&A Insights 12M 2023 update, the GCC region accounted for the majority of deals with 565, valued at $83.2 billion.
M&A activity in 2023 remained buoyant as dealmakers shrugged off geopolitical tensions, rising cost of capital and general economic uncertainty in Western markets. Domestic deals dominated the region in terms of volume at 49 percent, while cross-border mergers and acquisitions contributed 72 percent of the total value. As companies seek to gain strategic advantages on a global scale, the value of cross-border deals increased 14 percent year-on-year (yoy).
Sovereign wealth funds (SWFs), such as the Abu Dhabi Investment Authority (ADIA) and Mubadala of the (UAE), the Public Investment Fund (PIF) of the Kingdom of Saudi Arabia (Saudi Arabia), and the Qatar Investment Authority (QIA), continued to lead deal activity in the region to support their countries’ economic strategies.
The United Arab Emirates recorded the largest mergers and acquisitions of the year in the region with the announced acquisition of Univar Solutions by Apollo Global Management and ADIA for $8.2 billion. This was followed by the acquisition of American mobile game developer Scopely, Inc. by PIF-owned Savvy Games Group for $4.9 billion, and the acquisition of the United Arab Emirates’ Cvent Holding by Blackstone and ADIA for 4.7 billion dollars, closing the top three.
Outbound deals contributed the majority of M&A deal value in 2023. A total of 208 deals amounted to $53.5 billion. In terms of sectors, technology accounted for the majority of volume with 141 deals, while chemicals took the top spot in deal value with $17 billion.
North America remained the largest acquiring region by value, with transactions worth a total of $2.7 billion and the largest number of incoming Mena deals at 32.
Brad Watson, Strategy and Transactions Leader at EY Menasays:
“Deals remained strong in 2023. Sovereign funds led M&A activity in Mena with a focus on national development and investment in future sectors. We expect M&A activity in Mena to remain strong in 2024, given the continued secular trends around the energy transition and the digitalization of everything.”
The United Arab Emirates and Saudi Arabia among the favorite investment destinations
The United Arab Emirates cemented its status as a preferred destination for investors due to its business-friendly regulations and efficient legal framework. In 2023, the United States was the favorite destination for UAE investors with 21 deals amounting to $15.3 billion in total value. The United States-UAE Business Council actively promotes partnerships between the two countries.
Another popular investment destination in the region was Saudi Arabia. The United Arab Emirates and Saudi Arabia reported a significant combined deal volume of 305 and a deal value of $24.8 billion. The two countries were also among the top bidders for Mena, indicating their active participation in the M&A landscape.
Mergers and acquisitions in energy and resources take center stage
The region’s focus on energy and resources was clearly evident with significant capital deployment across the energy and resources spectrum.
Oil and gas entry deals saw an increase in volume and value in 2023. The acquisition of stakes in the Satah Al Razboot (20 percent), Mubarraz (12.9 percent), Umm Lulu (20 percent) oil fields ), TotalEnergies SE’s Bin Nasher (20 percent) and Al Bateel (20 percent) for $1.6 billion contributed to 97 percent of the incoming deal value in this space.
The chemical sector reported a significant increase in transaction value, totaling $4.7 billion. Notably, Abu Dhabi National Oil Company (Adnoc) acquired a 50 percent stake in Fertiglobe for $3.7 billion to achieve its chemical strategy and energy transition goals, marking the largest domestic deal. of 2023.
The metals and mining sector recorded four deals worth $3.4 billion, up from two deals in 2022. PIF acquired Saudi Iron & Steel Company (Hadeed) for $3.3 billion to accelerate development Saudi Arabian industry. This is consistent with regional SWFs creating national champions, i.e. local platforms that gain competitive advantage through scale.
Anil Menon, head of mergers and acquisitions and equity capital markets leader at EY Mena, saying:
“The Mena M&A market demonstrated remarkable resilience despite regional political tensions and global economic uncertainty. Confidence in regional boards remains high as Saudi Arabia and the United Arab Emirates embark on the largest renaissance any region has ever undertaken.”
News Source: Khaleej Times