- Top five MENA target countries by deal value were UAE, Egypt, Saudi Arabia, Morocco and Oman
- Domestic deals were the major contributor of M&A activity in the region, representing 48% of the total deal volume in the first half of 2022
- Deal activity in the region was primarily driven by the strong involvement of private equity and sovereign entities and rising technology investments
The MENA region recorded 359 M&A deals worth US$42.6 billion during the first six months of 2022, according to the EY MENA M&A Insights report.
The increase in M&A activity represents a 12% year- on-year (YoY) rise in deal count, driven by continued post-pandemic economic growth across the region fostered by high oil prices and growing confidence in corporate boardrooms.
According to the report, domestic deals contributed 48% and 33% of the total M&A deal volume and value respectively over the six-month period. Although fluctuating crude prices, economic uncertainty and disruptions to global markets provided marginal impetus, deal activity was significantly driven by involvement of private equity (PE) or sovereign wealth funds (SWF).
M&A activity involving PE and SWFs accounted for 35% and 38% of the total deal volumes and values respectively in the first half of 2022. Among the domestic PE or SWF deals, the United Arab Emirates (UAE) was the most favored destination with 18 deals, while the Kingdom of Saudi Arabia (KSA) was the most active acquiring region with 27 deals.
The report also revealed that deals involving government-related entities (GRE) saw a total deal value of US$16.9 billion in the first half of 2022, accounting for 40% of total disclosed deal value. Interesting to note that GRE led deals have declined from an average of 62% of value in the prior years to 40% of value signalling an increased participation by the private sector in regional deals.
Brad Watson, EY MENA Strategy and Transactions Leader, says:
“Despite the global economic uncertainty, we are continuing to witness a positive trajectory in M&A activity across the MENA region as economic diversification initiated by governments continue to buoy interest in strategic transactions. Fiscal reforms, particularly in the UAE and Saudi Arabia, aimed at strengthening cooperation between the public and private sector, are increasing the appetite of investors, while government-led initiatives across the board are supporting the region’s burgeoning start-up ecosystem that further increase deal activity.”
Top five MENA target countries by deal value were UAE, Egypt, Saudi Arabia, Morocco and Oman
The UAE led the top five target countries across the MENA region, with 105 deals signed worth US$14.2 billion. This was followed by Egypt with 65 deals worth US$3.2 billion, Saudi Arabia with 39 deals worth US$2.8 billion, Morocco with 18 deals worth US$1.8 billion and Oman, where 10 deals were inked with a total value of US$0.7 billion.
Overall top five target subsectors in the MENA region, by deal value, included transportation, consumer products, telecommunications, real estate and power & utilities
Amidst the volatility for commodity prices and inflationary pressures, GCC region continued diversifying from its oil and gas businesses. Consequently, industries such as transportation, consumer products, telecommunications, real estate and power & utilities continued to attract the lion’s share of investments.
Anil Menon, Head of MENA M&A and ECM, EY, says:
“The most interesting development in the MENA M&A market in H1 2022 is the reduced dependence on GRE led deals. The private sector is leading the charge in deal making in MENA, which is reflective of the attractive fundamentals, abundant liquidity and rerating of longer duration growth companies.”
Overall, 173 domestic deals were concluded worth US$13.9 billion in the first six months of 2022. Three deals formed around 41% of the domestic M&A value.
Ghitha Holding PJSC agreed to acquire Tamween Management LLC for US$2.4 billion; Q Holding acquired Reem Investments PJSC for US$1.6 billion; and Saudi Arabia’s Public Investment Fund acquired Kingdom Holding Company (16.8% stake) for US$1.5 billion.
The top five domestic subsectors by deal value were: real estate (US$3.3 billion), consumer products (US$2.9 billion), banking and capital markets (US$2.4 billion), asset management (US$1.5 billion) and other transportation (US$0.8 billion).
Rising energy prices, implementation of business-friendly reforms in the region as well as the easing of government travel restrictions resulted in higher inbound deal volume in the MENA region, with 94 deals, worth US$9.8 billion, compared to 62 deals in the same period last year.
The UAE continued to be the favoured investment destination with 51 deals worth $7.4 billion during the first half of 2022, supported by the reforms aimed at strengthening its business environment, attracting foreign investment and incentivising companies to set up or expand their operations.
Egypt also emerged as another major investment destination with deal activity surging thrice in 6M 2022 YoY, mainly led by favourable government initiatives including granting a special license to foreign investors.
USA leading the inbound deal activity in the MENA region
United States of America (USA) based entities were the most active investors in MENA, in terms of deal volume, taking part in 30% of inbound deal activity with a particular focus on technology-related investments. Activity was largely driven by the US$5 billion deal signed in June by Caisse de Depot et Placement du Quebec to acquire a 22% stake in Jebel Ali Free Zone, a 22% stake in National Industries Park, and a 22% stake in Jebel Ali Port.
The top five subsectors by deal value were: other transportation (US$5 billion), power and utilities (US$1.7 billion), technology (US$1.5 billion), chemicals (US$0.6 billion) and real estate (US$0.4 billion).
In the opening six months of 2022, the region witnessed 92 outbound deals, which amounted to US$19.0 billion in comparison with 75 deals amounting to US$5.2 billion in 6M 2021. The UAE saw the highest number of outbound deals, led by the technology and consumer products sector, which contributed to 35% in terms of deal volume out of 54 outbound deals from the UAE.
The UAE also witnessed the largest outbound deal, signed in May, as Emirates Telecommunications Group Company acquired a 9.8% stake in the UK’s Vodafone Group Plc in a deal worth US$4.398 billion.
The top five outbound target subsectors by deal value were: telecommunications (US$4.4 billion), media and entertainment (US$3.5 billion), airlines (US$2.2 billion), consumer products (US$1.3 billion), and power and utilities (US$1.3 billion).
Notes to editors
This report summarizes and tracks announced M&A activity in the MENA market (with MENA being defined and limited to Algeria, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Palestinian territories, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, the UAE and Yemen).
In this study, deals have been categorized as:
- Domestic: MENA investors carrying out deals in the MENA region
- Inbound: non-MENA investors carrying out deals in the MENA region
- Outbound: MENA investors carrying out deals outside the MENA region
Transactions less than $5 million and 5% stake are not considered in our analysis.
Deals with disclosed values are only considered for analysis based on value, whereas all the deals satisfying the above-mentioned criteria are considered for the deal volume analysis.
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