Private Equity And SWF Investments Rising In MENA

The region witnessed a strong rise in deal value and volume, aided by rising business confidence and improved liquidity.



Private equity and sovereign wealth fund (SWF) investments in the MENA region are strongly rebounding aided by the improved confidence in the regional economy, according to a report by Ernst & Young (EY).

Out of 442 deals announced in the MENA region during 2013, SWFs were involved in 19 deals with a deal value of $14.5 billion. This makes SWFs the single largest buyer constituency in MENA, contributing to 29 per cent of overall deal values.

Private equity investors were involved in around 66 deals out of 442 with a deal value of $4 billion, the report said. Amongst the private equity transactions, the most notable was that of Jabez partners’ acquisition of Green Non-life insurance in South Korea for $1.5 billion.

“According to the findings in our recent capital confidence barometer, confidence in the regional economy is at its highest in two years, cash is in abundance, and credit is readily available,” said Phil Gandier, MENA head of transaction advisory services, EY.

“As confidence returns to board rooms, we should see strengthened buyer intentions driving increased deal activity in 2014.”

The region also saw a rise in mergers and acquisitions in 2013 with deal value rising to reach $50.7 billion, up by 13 per cent from $44.8 billion in 2012.

In Q4 2013, announced deal volumes rose 11 per cent from 107 deals in Q4 2012 to 119 deals although deal values dropped by 40 per cent.

According to EY’s latest MENA capital confidence barometer, around 75 per cent of respondents said that they expect local deal volumes to improve. Around 87 per cent of the respondents said that they consider credit as stable or as improving.

Sectors most likely to witness an acquisition in the coming 12 months are consumer products, real estate, automotive, diversified industrial products and financial services, according to the survey.

The majority of respondents also said that they would use cash to fund their future acquisitions, indicating high levels of liquidity.

“Overall, 2013 was a better year for the M&A market,” said Gandier.

“We expect performance to continue to improve into 2014 due to the alignment of core fundamentals such as positive economic sentiment, enhanced credit availability, the imperative for growth and the expectation to create jobs.”

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