Middle East M&A activity surges as wealth funds use deals to build local champions

Middle Eastern sovereign wealth funds are using merger and acquisitions (M&A) to scale into new verticals and build local champions, Bain & Company said in its fifth annual Global Mergers & Acquisitions report. The move will also strengthen partnerships, invest in the future and bolster the region, the report added. Regional M&A activity rose nearly 39% in 2022, largely fueled by government-owned sovereign wealth funds. Combined, sovereign wealth funds and corporations represented 84% of deals, with private equity investors doing relatively few deals. “With a strong economy buoyed by high oil prices, the Middle East is well positioned to rely on M&A to further advance the region’s long-term push to expand beyond hydrocarbons as well as globalise its companies,” the report noted. “These are good times for the local economy, with expected regional GDP growth of 6.5% (7.6% in Saudi Arabia), the highest it’s been in more than a decade. The Middle East’s sovereign wealth funds are growing, too, and with a new government mandate, they have become a treasure chest for much of the M&A activity.” The report cited Saudi Arabia’s Public Investment Fund (PIF) investing $1.3 billion in four Egyptian companies in August 2022, including Abu Qir Fertilizers and Alexandria Container and Cargo Handling. On the other hand, private equity activity is limited in the region and has dropped by 36% in the first 10 months of 2022. However, there are some signs of reviving interest from firms preparing for IPOs, which are booming. Corporations are buying companies or forming partnerships to consolidate local markets in strategic sectors, such as the deal between Saudi British Bank and HSBC Saudi Arabia or the Etihad-Air Arabia joint venture. Meanwhile, regional companies are expanding internationally through cross-border M&A or overseas investments, Bain & Company said, citing Abu Dhabi’s FAB merged its Egyptian operations with Bank Audi Egypt, creating one of Egypt’s largest banks, as an example. “In the years ahead, we expect more international companies will explore the cross-border possibilities of partnering with sovereign wealth funds and local authorities to create new sectors through joint ventures,” Bain & Company added. (Editing by Seban Scaria seban.scaria@lseg.com)

Middle East M&A activity surges as wealth funds use deals to build local champions

DISCOVER MORE

Saudi: Zain declares 157% higher profits in 2022

Egypt: Orascom Construction posts higher consolidated profits at nearly $134.5mln

Boursa Kuwait’s AGM approves cash dividend of $57.7mln

Banking woes, Fed keep investors on edge in nervous U.S. stock market

Deutsche Bank tumbles as jittery investors seek safer shores

Strength in megacap stocks masks broader U.S. market woes

ADX welcomes Emirates NBD Capital as a custodian amid post trading service enhancements

Union Coop distributes 22% cash dividends and 5% returns on shareholder purchases

Banking turmoil: Fitch Solutions revise 2023 gold price forecast to $1,950 an ounce

2 African development banks invest $16bln in oil, gas projects

GCC central banks track US Fed move; hike key rates by 25bps

Will gold face more downside or upside after Fed's rate hike?

UAE exchange firm Al Ansari upsizes IPO on strong investor demand

Dealmakers expect pick-up in activity despite 'brick wall' facing M&A

Credit Suisse meets to weigh options, under pressure to merge with UBS

Gulf exceptionalism creates M&A opportunities in the Middle East region despite global headwinds

M&A deal volume in MENA up 13% in 2022 on higher investor confidence

CBO approves merger of HSBC Bank Oman with Sohar International Bank

LATEST VIDEO

VIDEO: LSE-listing will facilitate more funding opportunities for us, Dar Global CEO

ZAWYA COVERAGE

Will gold face more downside or upside after Fed's rate hike?

Kenya signs $250mln deal with UK to boost food production

PODCAST: IFC is ready to back governments privatisation plans with capital

UAE's Presight AI to debut on Abu Dhabi Securities Exchange next week

China supports accounting firms, including Deloitte, doing business in the country

Dubai: Some private schools start notifying parents about fee hikes

UAE: Public transport fare ranks among the cheapest in the world, says new study

Ancelotti to Brazil would be a no-brainer, CBF president says

German workers' strike over pay is matter of survival, union boss tells Bild

THE BRI REPORT

China is reshaping the Belt and Road Initiative ahead of a post-pandemic era

DISCOVER MORE

LATEST VIDEO

ZAWYA NEWSLETTERS

ZAWYA COVERAGE