Slew of mergers and takeovers in Mena region |
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Saturday, Nov 08, 2008
Gulf News
Dubai: September saw a high rate of mergers and acquisitions in the Middle East and North African region, in efforts toward consolidation, while the rest of the world is gripped by financial turmoil, according to research conducted by Kuwait Financial Centre.
Twenty-four deals took place in the region during the month, at a total value of $3.2 billion (Dh11.74 billion), the majority of which took place in Bahrain and the UAE.
The largest transaction by value involved International Petroleum Investment Company (IPIC)International Petroleum Investment Company (IPIC)
, wholly owned by the Abu Dhabi Government-Abu Dhabi Investment Authority (ADIA), acquiring a majority stake in Aabar InvestmentsAabar Investments, a UAE holding company, for $1.8 billion.
During the month, the highest volume of transactions was in real estate and construction sectors, followed by industrial and manufacturing, investment services, oil and gas and infrastructure, power and utilities.
The industrial and manufacturing contributed the highest transaction value of $1.9 billion, according to the report.
One of the top deals that took place was the private equity arm of EFG-HermesEFG-Hermes (Egypt) acquiring a $65 million stake in the UAE-based Gulf Housing Solutions.
UAE tops list
The other was Dubai Investment GroupDubai Investment Group, financial services company of Dubai Holding, acquiring a 20 per cent stake in Mazaya Saudi for Commercial Investment Co. LLC for $136.1 million (Dh500 million) to tap opportunities in Saudi real estate.
During September, the maximum volume of deals originated in the UAE, amounting to 25 per cent, while 15 per cent of the deals originated from Bahrain, according to the report.
While the largest numbers of acquirers were from the UAE, the international players that followed were from Germany, Japan, Australia and the US.
The majority of the acquirers were from the financial services and banking, investment services, and real estate and construction sectors.
In the financial services and banking sector, one of the top deals was Bahrain-based Unicorn Investment Bank (Unicorn)Unicorn Investment Bank (Unicorn) acquiring a 100 per cent stake in Bahrain Financing Company (BFC)Bahrain Financing Company (BFC), a foreign exchange and remittance company in the GCC through the $1 billion strategic acquisition fund, promoted by Unicorn and established in cooperation with a number of strategic founding investors from across the GCC.
The report also speculated on mergers and acquisitions to take place in the coming months.
One of the expected deals involves Abu Dhabi Commercial Bank (ADCB)Abu Dhabi Commercial Bank (ADCB) and National Bank of Abu Dhabi (NBAD)National Bank of Abu Dhabi (NBAD).
"ADCBADCB is keen on foreign acquisitions after it lost its bid to buy into an Egyptian bank last year, especially in some markets in the Gulf, Turkey and SE Asia," the report said.
Additionally, it said that there might be a renewed attempt by QIAQIA on further purchase of British retail chain J. Sainsbury. In July 2008, QIAQIA held an ownership of 27 per cent of the company. Saudi Arabia-based Al Rajhi Group has plans to sell off 30 per cent stake in the company in an IPO in the first quarter of next year, the report said.
Although there is immense liquidity flow within the region, a merger and acquisition expert says that it is only a small portion of the total cash being injected into deals.
Azhar Zafar, Ernest and Young's Middle East head of mergers and acquisition said that, "outbound deals have been significantly higher than inbound deals, because this region has a cash surplus and is liquid."
At a time of unstable international financial market, companies continue to invest outside their protected borders.
"A company would not feel the need for merger and acquisition unless the value is good for them now," Zafar said.
© Gulf News 2008. All rights reserved.
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