GCC region leads M&A deals worth $42.5 bn

UAE, Saudi remained at the forefront
GCC region leads M&A deals worth $42.5 bn
M&A market resilience in H1 2023

A recent study reveals that the Middle East and North Africa (MENA) region experienced a significant number of mergers and acquisitions (M&A) transactions. The study documented a total of 318 M&A deals in the region, amounting to an impressive sum of $43.8 billion.

According to the latest update from EY MENA M&A Insights H1 2023, the majority of the 254 deals worth $42.5 billion took place in the GCC region. In comparison to the first half (H1) of 2022, the number of deals during this period witnessed a decline of 14 percent, while the total value of the deals experienced a slight increase of 0.4 percent.

Read more: UAE, Saudi, and Egypt accounted for 89 percent of region’s M&As

The M&A market in H1 remained in line with the trends observed in the latter half of 2022. Despite the challenging economic outlook, including factors such as high-interest rates, concerns about a potential recession, an inflationary environment, and geopolitical tensions, deals continued to take place. However, the report suggests that deal-makers approached the market cautiously, considering the uncertain market conditions.

GCC SWFs at the forefront of M&A

To bolster their countries’ economic strategies, sovereign wealth funds (SWFs) including the Abu Dhabi Investment Authority (ADIA) and Mubadala from the UAE, as well as Saudi’s Public Investment Fund (PIF), remained at the forefront of deal activity in the region. These SWFs played a pivotal role in driving the deal-making landscape, aligning their investments with their respective countries’ economic objectives.

Cross-border dominance

Among growth-focused companies, cross-border deals gained significant traction, comprising 57 percent of the total deal volume and 85 percent of the total deal value. This highlights their increasing popularity as companies seek opportunities beyond their domestic markets. Additionally, outbound deals accounted for 32 percent of the overall M&A deal volume and a substantial 70 percent of the total deal value.

According to the latest report, deals involving government-related entities (GREs) reached a total value of $29.9 billion, representing 68 percent of the total disclosed deal value and 19 percent of the overall deal volume. In contrast, transactions involving private equity (PE) or sovereign wealth funds (SWFs) accounted for approximately 23 percent of the total deal volume and a substantial 53 percent of the total deal value.

Significant contributor

The technology sector emerged as a significant contributor to the total deal volume, accounting for $15 billion. Following closely was the chemicals sector, contributing $11.9 billion. In contrast, the provider care sector lagged behind with $3.3 billion, creating a notable gap in comparison.

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