Qatar Egypt and UAE top drivers of Mena MAs

(MENAFN- The Peninsula)

DOHA: Mergers and Acquisitions (M&As) activity in the Mena region has remained robust during the current decade barring 2015 when both the number and value of deals significantly declined revealed an Al Masah Capital Limited Report titled Mena M&A industry.

During the period 2010-2015 the region witnessed M&A deals worth $105.5bn with GCC-based companies leading the way in terms of volume and value year-on-year peaking at an unprecedented 88.1 percent of the total value of deals in 2015.

Qatar Egypt and UAE with deals worth $22.37bn $21.72bn and $21.29bn respectively accounting for 62 percent of the total deal value during the period were the most preferred investment destinations in Mena. Real Estate & Construction with 239 deals worth $29.51bn financial services and banking with 346 deals worth $23.04bn telecom with 41 deals worth $15bn and F&B with 99 deals worth $5.72bn were the most attractive sectors collectively accounting for 725 deals worth $73.2bn.

The report also states that in terms of deal volume and value the GCC countries accounted for approximately 56.6 percent (196 deals) and 61.1 percent ($14.08bn) 56.1 percent (23 deals) and 20.0 percent ($2.98bn) and 46.5 percent (46 deals) and 36.4 percent ($2.08bn) of the total M&A activity recorded in the Mena region during 2010-15 within the financial services & banking telecom and F&B sectors respectively.

M&A activity in the region has gained traction over the years primarily due to strong fundamentals and favourable demographics and driven mainly by GCC-based entities with larger risk appetites and strong liquidity positions attained during periods of high oil prices. However the rapidly changing macroeconomic environment in 2015 due to geopolitical tensions and the anticipated decline in spending by governments on the back of weakened oil prices have resulted in the total value and volume declining to $7.78bn and 193 deals respectively registering the lowest levels in six years. Of this the six GCC countries accounted for 122 deals nearly two-thirds of the total in 2015. More specifically Egypt recoded 50 deals the largest in the region followed by the UAE with 47 Saudi Arabia with 31 and Jordan with 21 deals.

On the contrary global M&A value soared to an all-time record level in 2015 with 43302 deals worth nearly $4.8 trillion announced the previous highest being $4.6 trillion in 2007. Notably several mega deals were announced during the year including 57 deals worth more than $10bn each and nine deals worth more than $50bn each.

According to the report all the six GCC countries were among the top nations to lead outbound investments from the region.

This trend is expected to continue going forward as GCC companies look to drive growth by expanding into key emerging nations through strategic acquisitions.

M&A activity during 2010-2015 in the six GCC countries the North African countries of Algeria Egypt Libya Morocco and Tunisia and the Levant i.e. Jordan and Lebanon was analysed and included in the report. The report also highlights the regional deal landscape and considerations growth drivers and challenges and issues.

Current foreign ownership laws low ranking in the World Bank’s ‘Ease of Doing Business’ report liquidity squeeze due to lower hydrocarbon revenues and lack of transparency in regional regulatory framework are key factors that are likely to affect M&A deals in the region. The Al Masah Report also highlights the role of Private Equity (PE) firms who have become increasingly important in driving M&A activity as well as facilitating deals across the MENA region.

The Mena PE industry remained largely unchanged in 2015 recording 58 deals during the year worth $2.75bn. UAE continued to be the most preferred destination in the region with 19 deals.

The Peninsula