Middle East is a rare ‘global sweet spot’ for M&A in 2023 – PwC

The Middle East is a rare “global sweet spot” for merger & acquisition (M&A) activities amid the current market conditions, global consultancy PwC said in its latest report.

The companies need to plan well-thought-out strategies and ensure financial resources to make transformational deals, the consultancy said in its 2023 TransAct Middle East report titled, “Gulf exceptionalism creates M&A opportunities despite global headwinds”.

Although the companies need to be bold, thorough research before committing to a deal will be critical in uncertain times, it added.

“Saudi Arabia is expecting a further pick up in M&A activity in 2023, despite a strong pipeline of IPOs, as the gap in valuation multiples between these two exit routes narrows for investors looking to sell assets,” said Imad Matar, Deals Partner at PwC Middle East in Saudi Arabia.

Saudi sovereign Public Investment Fund (PIF) will continue to spearhead outbound cross-border transactions and fuel domestic deals.

The International Monetary Fund (IMF) estimates that oil-producing Middle Eastern countries could earn an additional $1.3 trillion in oil revenues over the next four years.

The Middle East currently benefits from deep resources for M&A investments, with the region’s sovereign wealth funds (SWFs) having an abundance of dry powder due principally to high oil prices, the report said.

At the same time, the Middle East’s transformation story, powered by new technologies, is increasingly compelling for regional and global dealmakers. This reflects the strong focus on technology and digital infrastructure across the Middle East’s M&A landscape in all sectors. 

UAE, Saudi top list

According to PwC, most of the Middle East M&A activity in 2022 was concentrated in the UAE, Saudi Arabia and Egypt, which collectively recorded 563 deals, or 89% of the region’s total deal volume. 

The UAE and Saudi Arabia witnessed the fastest year-on-year increase in deals, but remained at lower levels than in 2021, though volumes rose by 9% and 6%, respectively. 

In the UAE, deal activity focused on consumer markets, technology, industrials and financial services.

On the other hand, Saudi PIF closed a series of substantial deals in 2022, including a $1.5 billion acquisition of a 17% stake in Kingdom Holding Company, a $250 million acquisition of 30% of Saudi Tabreed, a subsidiary of the UAE-listed National Central Cooling Company, etc.

The report noted that M&A momentum maintained its pace in 2022 in Egypt, registering a modest 2.2% increase in deal volume year-on-year.

 

Source: https://www.zawya.com/en/markets/equities/middle-east-is-a-rare-global-sweet-spot-for-m-and-a-in-2023-pwc-amqthiyg

 

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