UAE, Saudi Arabia lead M&A activity in MENA in 2024: EY

Mergers and acquisitions (M&A) activity in the MENA region has experienced a notable uptick during the first three quarters of 2024, with 522 deals valued at a combined $71bn.

This represents a 9 per cent increase in deal volume and a 7 per cent rise in deal value compared to the same period last year, according to the latest EY MENA M&A Insights 9M 2024 report.

The UAE and Saudi Arabia have emerged as the dominant destinations for MENA-bound investments, with both nations seeing a combined total of 239 deals worth $24.5bn.

These two countries represent 52 per cent of the total deal volume and a remarkable 81 per cent of the region’s M&A value.

Their favourable business policies, strong infrastructure, and growing investment ecosystems continue to attract both regional and international investors.

Sovereign wealth funds (SWFs) from both countries, including the Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company, and the Public Investment Fund (PIF), have remained major players in the M&A space, driving investments in line with their respective national economic diversification strategies.

Cross-border M&As dominate the landscape

Cross-border transactions have been a key theme in MENA’s M&A activity. These deals accounted for 52 per cent of the total volume and 73 per cent of the value during the first nine months of 2024.

MENA investors have increasingly looked beyond their borders to pursue strategic acquisitions, reflecting a broader trend of global expansion and the liberalisation of regional investment policies.

Meanwhile, domestic M&A activity saw a strong growth trajectory, with 248 deals valued at $19.3bn, marking a 7 per cent increase in volume.

Domestic transactions were especially prevalent in the GCC, where government-related entities (GREs) drove activity in sectors such as oil and gas, metals, and mining.

Large-scale transactions lead in value

The largest M&A transaction in the MENA region during the period was the acquisition of Truist Insurance Holdings for $12.4bn.

This deal was led by Clayton Dubilier & Rice, Stone Point Capital, and Mubadala Investment, marking a significant milestone for the UAE as a key player in global finance.

Other high-value deals included Saudi Aramco’s $8.9bn purchase of a 22.5 per cent stake in Rabigh Refining and Petrochemical Company from Sumitomo Chemical, a landmark domestic deal that further consolidates Saudi Arabia’s position as a regional economic powerhouse.

Additionally, a consortium comprising PAG, Mubadala, and ADIA invested $8.3bn in a 60 per cent stake in the Chinese shopping mall company Zhuhai Wanda Commercial Management Group.

Sectoral focus: Insurance, oil and gas, and technology

The insurance and oil & gas sectors were the most attractive for investors in the MENA region, accounting for 34 per cent of the total deal value in 2024. Technology also saw a surge in activity, driven by increasing digital transformation, with several high-profile deals in the consumer tech and artificial intelligence spaces.

In the domestic M&A space, the oil and gas sector stood out, with 19 deals amounting to  $10.9bn, representing 46 per cent of the total deal value. Technology and consumer products followed, accounting for 31 per cent of the total domestic deal volume.

MENA’s strategic role in global investment flows

MENA continues to be a magnet for foreign direct investment (FDI), with inbound deals surging 20 per cent year-on-year in volume and 47 per cent in value. The US and the UK remain the leading source countries for inbound M&As, accounting for 42 per cent of total deal activity in the region. The technology and professional services sectors have seen particularly strong interest, with the US contributing 33 per cent of the deal volume in these areas, often in collaboration with UAE-based companies.

The UAE, in particular, remains a key hub for international investors, representing 60 per cent of the total inbound M&A volume and 67 per cent of the total inbound deal value. This is largely attributed to the country’s robust business environment, strong ties with global markets, and increasing focus on digitalization and AI.

Outbound M&A activity: Focus on Asia and North America

Outbound M&A activity from MENA continued to be a major contributor to overall deal value, accounting for 58 per cent of the total with 147 deals worth $41.4bn. Notably, Asia and North America represented the largest share of outbound investments, with these regions accounting for 46 per cent of deal volume and 77 per cent of deal value. Insurance and real estate were the largest sectors for outbound investments, driven in part by the increasing influence of MENA-based SWFs.

Outlook for the remainder of 2024

As we approach the end of 2024, M&A activity in the MENA region is expected to remain strong. According to EY MENA’s Anil Menon, head of M&A and Equity Capital Markets, the region is on track to exceed 700 deals by the end of the year, just shy of the historic five-year high of 750 deals.

Despite geopolitical uncertainty and higher capital costs, the region’s economic diversification efforts, strategic policy reforms, and the active involvement of SWFs are expected to continue driving deal flow.

Brad Watson, EY MENA Strategy and Transactions leader, added, “The improvement in M&A activity in 2024 can be attributed to strategic policy shifts, a more liberalised investment climate, and a rise in capital inflows from both local and international investors. The UAE, in particular, remains an attractive destination for investment, thanks to its business-friendly regulations and robust legislative framework.