Multiply Group leads the GCC M&A in Q3 2022 as the market sealed a total of 59 transactions, a growth of 23% y-o-y, said a report issued by the Investment Banking Department of Kuwait Financial Centre ‘Markaz’.

Saudi Arabia recorded the highest level of growth in M&A (mergers and acquisitions) quarter on quarter, at 175%, while UAE recorded the highest level of growth yoy, at 50%.

Multiply Group had invested $2.7 billion to acquire a 7% stake in Abu Dhabi National Energy Company.

Al Salam Bank

Following this is Al Salam Bank, which recorded the second largest transaction sealing its $2.2 billion acquisition of Ithmaar Bank’s consumer banking businesses alongside a portfolio of sukuk issued by the Government of Bahrain and the group’s indirect shareholdings in Bank of Bahrain and Kuwait, Solidarity Group Holding, Mastercard Inc and the Benefit Company.

ADES Arabia Holding took the third place penning a binding agreement with Seadrill Limited to acquire the shares of seven of its entities, each of which owns and operates a jack up drilling rig, for a total consideration of $628 million. The company expects to seal the deal in Q4 2022, upon obtaining regulatory approvals.

Qatar Electricity & Water Company (Qatar Electricity) finalised its acquisition of a 40% stake in Nebras Power for a total consideration of $530 million, upon which it became the sole owner of the company. Qatar Electricity acquired this stake from Qatar Holding through its wholly owned subsidiary, Raslaffan Operating Company.

Lastly, the Saudi Public Investment Fund signed a non-binding agreement to acquire a 30% stake in Almosafer Travel & Tourism Company from Seera Group Holding for a total consideration of $413.8 million, which includes an earn out component amounting to $102.8 million. This is based on an enterprise value of $998.6 million.

Acquirers and targets

The majority of closed transactions during Q3 2022 and Q3 2021 were carried out by GCC acquirers. Of the total number of transactions that closed during Q3 2022, GCC acquirers accounted for 74% while foreign acquirers accounted for 19%.

The remaining 7% represents transactions for which the buyer information was not available. GCC acquirers also dominated the market during Q3 2021 as they accounted for 69% of the total number of closed transactions while foreign acquirers accounted for 27%. Once again, the remaining 4% represents transactions for which the buyer information was not available.

Furthermore, GCC acquirers primarily invested in companies within their local markets and in international markets, and targeted regional companies to a lesser extent. Throughout Q3 2022, GCC acquirers closed a total of 39 transactions within their local markets, compared to 23 transactions in Q2 2022.

In addition, GCC acquirers sealed 18 cross-border transactions in Q3 2022, relative to 24 cross-border transactions in Q2 2022. UAE buyers accounted for approximately 44% of the total number of cross-border transactions that closed in Q3 2022, followed by Saudi Arabia and Kuwaiti, who accounted for 33% and 17%, respectively.

Foreign buyers

The GCC market received a slightly lower level of interest from foreign buyers in Q3 2022 compared to Q2 2022 and Q3 2021. Throughout Q3 2022, foreign buyers closed 11 transactions compared to 15 transactions in Q2 2022 and 13 transactions throughout Q3 2021. The UAE continued to be an attractive contender compared to its GCC constituents which is evident as they accounted for all of the foreign-led transactions that closed throughout the quarter.

Sectoral View

The transactions that closed in Q3 2022 targeted companies that operate across various sectors, highlighting another trend that has remained strong throughout the past few quarters. With that being said, the sectors that witnessed the greatest level of activity throughout Q3 2022 were the Financials, Industrials, Consumer Discretionary and Insurance sectors.

Collectively, these four sectors accounted for 49% of the transactions that closed throughout the quarter.

Deals in the pipeline

By the end of Q3 2022, there was a total of 32 announced transactions in the pipeline, which is relatively stable compared to Q2 2022, which ended with 30 transactions announced.

The majority of these transactions involved Saudi targets, which accounted for 50% of the total number of announced deals, followed by UAE and Kuwait at 25% and 19%, respectively.

The remaining transactions involved Omani and Qatari targets while Bahrain ended the quarter with no transactions in the pipeline. Saudi Arabia and Kuwait were the only two markets that witnessed growth in its pipeline relative to the previous quarter.

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