State of the deal: MEA posts $60bln worth of M&A transactions in first half

Across the GCC, M&A activities are expected to increase amid the Covid-19 pandemic

An investor uses his mobile phone at the Dubai Financial Market.

An investor uses his mobile phone at the Dubai Financial Market.

REUTERS/Ahmed Jadallah

With 130 deals valued at $59.8 billion, M&A activity in the Middle East and Africa has largely been shielded from the global downturn in the opening half of 2020.

According to Mergermarket's "1H20 Global Report," the first-half deals include nine valued over the $1 billion mark, including two above $10 billion in the second quarter. The first half M&A performance has the second highest year to-date value on Mergermarket record, behind last year's $119.5 billion worth of transaction driven by the $70 billion Saudi Aramco/Sabic tie-up.

However, outbound M&A, dipped to its lowest year to date value since the global financial crisis over a decade ago to just $6.6 billion so far this year. This included investments into India-based Jio Platforms by Mubadala ($1.2 billion) and Abu Dhabi Investment Authority ($752 million) as well as the $1 billion acquisition of the Ritz Hotel in London.

Across the GCC, M&A activities are expected to increase amid the Covid-19 pandemic as small and medium enterprises and several large corporates will look for equity via capital injections to satisfy working capital needs, according to Ali Maabreh, head of M&A at KPMG in Saudi Arabia.

In the first quarter, the number of closed M&A (merger and acquisition) transactions in the GCC for the first quarter witnessed a 52 per cent decline when compared to the same period last year, while it fell 51per cent over the previous quarter, according to a report by Kuwait Financial Centre.

"The second quarter saw a consortium of investors led by Global Infrastructure Partners acquire a 49 per cent stake in Adnoc's gas pipeline assets for $10.1 billion, announced in June. Volatility in the markets means that the deal represents a safer investment into a more insulated part of the value chain, while allowing Adnoc to continue its divestment strategy in order to open capital and reinvest," Mergermarket said in its report.

With 15 deals, M&A in the energy, mining & utilities sector reached $ 32.1 billion in the first half of the year, surpassing all annual totals the sector has seen in the region.

"The big-ticket deals in the first half have already pushed this year's value 14.8 per cent ahead of the full-year 2019 figure of $28 billion (62 deals), the previous annual record. The sector represents a 53.7 per cent of MEA's year to-date value this year, up from 19.6 per cent in 2019," said the report.

The technology sector has remained active in MEA despite the uncertainty, mirroring trends in global deal-making. The sector saw 27 deals worth a combined $2.5 billion, contributing 21.1 per cent in the region's first half deal count, an increase from 17.6 per cent in 2019.

The pharma, medical & biotech sector has seen its share of the MEA region's overall deal count rise to 10.9 per cent in 2020, with 14 deals worth a combined $579 million.

"Despite the added difficulties in conducting cross-border deals, foreign investment into the region remained strong in the second quarter, reaching $16.3 billion (31 deals) in the second quarter - the largest quarterly value since first quarter 2017 at $2 billion," said the report.

Copyright © 2020 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.

More From Equities