The Middle East witnessed a significant surge in M&A deals in 2022, with the UAE, Saudi Arabia, and Egypt leading the way. These countries made up 89% of the 632 M&A deals in the region last year. M&A activity in the Middle East has shown a remarkable exception to the general pattern of the slowdown in global M&A deal activity. The report highlights key M&A trends for 2023 and what companies can do to make transformational deals, showing that the Middle East is a rare global sweet spot for M&A for companies that have the right strategies and financial resources to make transformational deals. The report indicates that the Middle East will continue to be a significant growth centre for M&A in early 2023, as long as companies have the right strategies and financial resources to make transformational deals.
Mergers and Acquisitions: UAE, Saudi Arabia, and Egypt Lead M&A Activity in the Middle East
The Middle East experienced a significant surge in merger and acquisition (M&A) deals in 2022, with the UAE, Saudi Arabia, and Egypt leading the way. According to a report by PwC Middle East titled “Gulf exceptionalism creates M&A opportunities despite global headwinds,” these three countries made up 89% of the 632 M&A deals in the region last year. The UAE and Saudi Arabia witnessed the fastest year-on-year increase in deals, with volumes rising by 9% and 6%, respectively.
The report attributes the exceptional M&A activity to “Gulf exceptionalism,” which is due to favourable regional dynamics such as elevated oil prices and increased fiscal discipline that contributed to greater economic flexibility and relatively higher growth in the region. Furthermore, the Middle East is a rare global sweet spot for M&A for companies that have the right strategies and financial resources to make transformational deals.
In the UAE, deal activity focused mainly on consumer markets, technology, industrials, and financial services, supporting the country’s drive to diversify away from oil and gas. Technology, energy, food processing, healthcare, and education sectors were the top IPO deals drivers in the region.
The report highlights key M&A trends for 2023 and what companies can do to make transformational deals. The Middle East remains an attractive target for venture capital (VC) funds, with fundraising continuing to drive capital flows in 2022. Some of the emerging M&A themes of 2022 include deep resources available to support M&A investments, higher interest rate environment stimulating increased focus on value creation, strong focus on technology and infrastructure, cross-border M&A building up national and regional champions, and the energy transition creating new M&A opportunities.
Romil Radia, Regional Deals Markets Leader at PwC Middle East, expressed optimism about the region’s outlook, saying, “The Middle East is certainly not immune to the economic headwinds affecting M&A elsewhere, but at the start of 2023, the mood here is more optimistic than most global markets, and some momentum from last year has continued into 2023. In its favour, the region has deep financial resources available for deals, which is supporting outbound and cross-border transactions. There is also enormous potential around the energy transition, and a strong focus on tech and digital acquisitions as transformation programmes continue regionally.”
In conclusion, the UAE, Saudi Arabia, and Egypt lead M&A activity in the Middle East, with favourable regional dynamics such as elevated oil prices and increased fiscal discipline contributing to greater economic flexibility and relatively higher growth in the region. M&A activity in the Middle East has shown a remarkable exception to the general pattern of the slowdown in global M&A deal activity. The Middle East remains an attractive target for venture capital funds, and some of the emerging M&A themes of 2022 include deep resources available to support M&A investments, higher interest rate environment stimulating increased focus on value creation, strong focus on technology and infrastructure, cross-border M&A building up national and regional champions, and the energy transition creating new M&A opportunities.
The report indicates that the Middle East will continue to be a significant growth centre for M&A in early 2023, as long as companies have the right strategies and financial resources to make transformational deals.
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