|17 November, 2019

DP World's acquisition of Topaz Energy and Marine leads the top GCC M&A transactions during Q3 2019: Markaz

The Financials, Industrials, Consumer Discretionary and IT sectors witnessed the highest number of transactions

DP World's acquisition of Topaz Energy and Marine leads the top GCC MA transactions during Q3 2019: Markaz

Kuwait: UAE’s industrial sector leads the top GCC M&A transactions during Q3 2019 as per a report recently issued by the Investment Banking Department at Kuwait Financial CentreMarkaz”. The top reported deal within Q3 2019 was completed by DP World as they acquired 100% of Topaz Energy and Marine from Renaissance Services and Standard Chartered Private Equity (recently bought out by Affirma Capital) for a total value of $1.1 billion.

The remaining top transactions were split evenly between Kuwaiti and Saudi targets. Among the transactions involving Saudi targets was Saudi Aramco’s acquisition of a 50% stake in Saudi Aramco Shell Refinery Company, a joint venture it created in collaboration with Royal Dutch Shell. Aramco purchased the remaining stake for $631 million and as a result, became the sole owner of the refinery company. The second transaction that closed in Saudi Arabia was undertaken by Fawaz Abdulaziz Al Hokair & Co. as it acquired 100% of Innovative Union Company for $91 million. In terms of the transactions involving Kuwaiti targets, Al Ghanim Trading’s acquisition of Kuwait Investment Authority’s 16% stake in Gulf Bank for $504 million, was the largest amongst the top transactions involving a Kuwaiti target company. The second largest transaction involving a Kuwaiti target company was Qurain Petrochemical Industries’ acquisition of a 60% stake in Jassim Transport and Stevedoring for a total of $138 million.

GCC M&A Growth

According to Markaz’ report, the number of closed M&A transactions in the GCC during Q3 2019 increased by 3% compared to Q3 2018. Among the region, Kuwait reported the highest increase in the number of closed transactions in Q3 2019 compared to Q2 2019, while Saudi Arabia recorded the highest increase compared to the same period in the previous year.

Acquirers and Targets

A majority of the transactions completed during Q3 2019 and Q2 2019 were carried out by GCC acquirers. Of the total number of transactions closed during Q3 2019, GCC acquirers accounted for 67% while foreign acquirers accounted for 30%. The remaining 3% represents transactions for which the buyer information was not available. The market witnessed a similar pattern during the previous quarter in Q2 2019 as GCC acquirers accounted for 77% of the total number of closed transactions while foreign acquirers accounted for the remaining 23%.

Each of the GCC markets seemed to have a different appetite with regards to M&A transactions during Q3 2019. Kuwaiti and Saudi acquirers predominantly targeted companies within their home countries. UAE acquirers mostly invested outside of the GCC, with a slightly lower exposure to targets in their home country. Omani acquirers did not complete a transaction within or outside the GCC during Q3 2019, while Qatari and Bahraini acquirers each closed only one transaction during the same period.

Foreign Buyers

During Q3 2019, the market witnessed a growth of 29% in the number of transactions completed by foreign buyers compared to Q2 2019 as well as Q3 2018. In the past, foreign buyers have typically acquired companies within the UAE as is demonstrated by the number of transactions completed within the UAE relative to other countries in the GCC overtime. This trend persisted throughout this quarter as the majority of the transactions completed targeted companies in the UAE (~78%). The remaining transactions involved Qatari and Saudi targets, each of whom represented 11% of the total transactions completed. After a year of no activity, Qatar has recently attracted foreign investors while Kuwait, Bahrain and Oman recorded no activity for this quarter.

Sectorial View

The sectors that witnessed the highest level of activity during Q3 2019 were the Financials, Industrials, Consumer Discretionary and Information Technology sectors. Collectively, these sectors accounted for 60% of the total number transactions closed.

The Financials sector recorded the greatest increase in the level of activity relative to the previous quarter. In addition, there was no activity within the Consumer Discretionary sector during the last quarter; however, it is one of the sectors that observed a high level of activity during Q3 2019.

Deals Pipeline

By the end of Q3 2019, there was a total of 12 announced transactions in the pipeline, which translates into a 45% decline in activity relative to the Q2 2019. Roughly, 60% of the transactions completed this quarter involve targets from the UAE while the remaining 40% is attributable to activity within Saudi Arabia and Kuwait.

Top 5 M&A Deals by Reported Value* – Q3 2019

Target Company

Target

 Country

Buyer

Buyer Country

Percent Sought

Deal Value (USDmn)

Status

Topaz Energy and Marine Limited

United Arab Emirates

DP World

United Arab Emirates

100

1,079

Closed

Saudi Aramco Shell Refinery

Saudi Arabia

Saudi Aramco

Saudi Arabia

50

631

Closed

Gulf Bank

Kuwait

Al Ghanim Trading Co.

Kuwait

16

504

Closed

Jassim Transport & Stevedoring

Kuwait

Qurain Petrochemical Industries

Kuwait

60

138

Closed

Innovative Union Company

Saudi Arabia

Fawaz Abdulaziz Alhokair & Co.

Saudi Arabia

100

91

Closed

Source: S&P Capital IQ, GCC Stock Exchanges, Local Newspapers, Markaz Analysis

*Top deals were chosen based on transactions, which had all necessary information provided.

Number of Closed GCC M&A Transactions

Country

Q3 2019

Q2 2019

Q3 2018

% Change

 (Q2 2019)

% Change

 (Q3 2018)

Bahrain

0

3

3

-100%

-100%

Kuwait

8

3

8

167%

0%

Oman

0

3

2

-100%

-100%

Qatar

1

0

0

N/A

N/A

Saudi Arabia

8

11

2

-27%

300%

United Arab Emirates

13

11

14

18%

-7%

Total

30

31

29

-3%

3%

Source: S&P Capital IQ, GCC Stock Exchanges, Local Newspapers, Markaz Analysis

* % changes are in comparison to Q3 2019.

Sector-wise Classification of Deals – Q3 2019

Sector

GCC Acquirers

Foreign Acquirers

Other*

Grand Total

%

Financials

3

2

0

5

17

Industrials

5

0

0

5

17

Consumer Discretionary

4

0

0

4

13

Information Technology

0

4

0

4

13

Insurance

1

2

0

3

10

Energy

1

0

1

2

7

Healthcare

2

0

0

2

7

Consumer Staples

2

0

0

2

7

Real Estate

1

0

0

1

3

Education

1

0

0

1

3

Media

0

1

0

1

3

Grand Total

20

9

1

30

100

*Other refers to deals where buyer information is not available.

Geographical Distribution by Number of Announced Pipeline Transactions (Q32019)

-Ends-

About Kuwait Financial Centre “Markaz

Established in 1974, Kuwait Financial Centre K.P.S.C “Markaz” is one of the leading asset management and investment banking institutions in the MENA region with total assets under management of over KD 1.10 billion as of 30 September 2019 (USD 3.62 billion). Markaz was listed on the Boursa Kuwait in 1997.

For further information, please contact:

Sondos Saad

Media & Communications Department

Kuwait Financial Centre K.P.S.C. "Markaz"
Tel: +965 2224 8000
Fax: +965 2246 7264
Email: ssaad@markaz.com    
www.markaz.com 

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