The Middle East and North Africa (MENA) investment landscape is set for a turnaround in 2024, fueled by the expected drop in interest rates, stated Tenet Consulting in its latest ‘Global Startup Valuation Trends’ report. In 2023, the decline in merger and acquisition (M&A) activity to its lowest step-up in a decade across numerous venture capital markets worldwide raised concerns about the health of the investment landscape.
However, expectations for a turnaround in 2024 are rising with the growing hopes of a decline in interest rates this year. This shift will likely support initial public offerings (IPOs) and M&A deals, reigniting investor confidence and deal-making momentum.
Cheaper borrowing costs to fuel growth
“Lower interest rates generally translate to cheaper borrowing costs, incentivizing businesses to pursue expansionary strategies such as mergers and acquisitions,” says Alexey Bogdanov, partner at Tenet Consulting. Moreover, a decline in borrowing expenses could entice more companies to go public, tapping into the equity markets to fuel growth initiatives, added Bogdanov.
The slowdown in venture capital investments was not evident in the MENA region only since it mirrored the decline globally. The region, however, has not traditionally followed global trends due to significant investments from government bodies that aim to foster local tech ecosystems by supporting venture capital funds.
Therefore, Tenet Consulting’s report expects a resurgence in investment activity across the MENA region following the decline it witnessed last year. The report expects UAE and Saudi Arabia’s startups to likely continue taking center stage in dealmaking this year.
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