M&A activity in MENA region jumps 4% to $86bn in 2023

Mergers and acquisitions (M&A) activity in the Middle East and North Africa (MENA) region rose by 4 per cent to $86bn in 2023, supported by sovereign wealth funds’ focus on national development, a report by EY showed on Monday.

The GCC region was pivotal in MENA’s dealmaking activity last year, accounting for the majority of deals at 565, valued at $83.2bn as dealmakers shrugged geopolitical tensions, rising cost of capital and global economic uncertainty.

“Dealmaking remained strong in 2023. Sovereign wealth funds led M&A activity in MENA with the focus on national development and investing in sectors of the future,” said Brad Watson, EY MENA Strategy and Transactions Leader.

The UAE consolidated its status as the preferred destination for investors due to its business-friendly regulations and efficient legal framework. The UAE and Saudi Arabia accounted for 305 deals valued at $24.8bn.

EY said outbound deals contributed the largest share of the M&A deal value in 2023, with a total of 208 deals valued at $53.5bn.

The technology sector witnessed the highest M&A activity with 141 deals, while chemicals ranked first in deal value with $17bn.

North America remained the largest acquiring region by value with transactions worth a total of $2.7bn and the highest number of inbound MENA deals with 32.

Meanwhile, the US was the preferred destination for the UAE investors with 21 deals valued at $15.3bn. Watson expects M&A activity in MENA to remain robust in 2024, driven by continuing secular trends around energy transition and digitalisation.

GCC wealth funds drive dealmaking

GCC wealth funds including the UAE’s Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company, Saudi Arabia’s Public Investment Fund (PIF) and Qatar Investment Authority (QIA), continued to lead the deal activity in the MENA region.

The UAE reported the region’s biggest deal in 2023 following Apollo Global Management and ADIA’s acquisition of Univar Solutions for $8.2bn.

The deal was followed by the acquisition of US mobile games developer Scopely by a Savvy Games Group – a unit of Saudi Arabia’s Public Investment Fund (PIF) in a deal valued at $4.9bn last July. The acquisition of the UAE’s Cvent Holding by Blackstone and ADIA for US$4.7bn was the region’s third-biggest transaction.

MENA’s M&A energy deals

The Middle East region’s focus on energy and resources was evident in 2023, with significant capital deployment across the energy and resources sector.

Oil and gas inbound deals witnessed an increase in volume as well as value in 2023.

France’s TotalEnergies acquisition of CEPSA’s upstream assets in the UAE – Satah Al Razboot (20 per cent), Mubarraz (12.9 per cent), Umm Lulu (20 per cent), Bin Nasher (20 per cent) and Al Bateel (20 per cent) for $1.6bn in March 2023 contributed 97 per cent to inbound deal value in this sector.

The chemicals sector reported a significant rise in deal value, totalling $4.7bn. Abu Dhabi’s ADNOC Group acquired a 50 per cent stake in Fertiglobe for $3.7bn last December to advance its chemicals strategy and energy transition strategy.

The metals and mining sector recorded four deals worth $3.4bn, an increase from two deals in 2022. Saudi Arabia’s PIF acquired the Saudi Iron & Steel Company (Hadeed) for $3.3bn to bolster the kingdom’s industrial development.

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