According to Mergermarket, the Energy, Mining & Utilities sector was the most active sector behind Technology, Media and Telecoms, accounting for a 27.5% share of the market by value. Inbound investment in Q1 2013 ($15.1bn, 34 deals) was off to a better start than Q1 2012 ($5.7bn, 40 deals) by deal value, up 167%. On the other hand, outbound deal value shrunk by 52.2% with deals valued at $2.8bn (21 deals) in Q1 2013 compared to $5.8 (39 deals) in Q1 2012.
Borys Dackiw, Baker & McKenzie’s managing partner for the Gulf region, says: “Over the past 12 months we have witnessed a healthy flow of cross-border M&A activity within the MENA region as well as some significant inbound and outbound FDI mandates and this looks set to continue through 2014. Coupled with a number of the region’s larger family owned businesses globalizing their operations, we believe the next 12 months could yet prove to be even busier in terms of M&A activity.”
Phil Gandier, MENA Head of Transaction Advisory Services, Ernst & Young, says: “The significant rise in total deal values when compared to last year indicates an increased level of confidence in the Middle East M&A markets and that there may be more promising quarters ahead. This should be spurred on by improved confidence in the global economy and the increasing ability of regional investors to factor in political instability around some areas of MENA to their deals and still get the deal done.”
Mergermarket revealed that Q1 2013 deals ($18.5bn, 59 deals) dropped by only 5% compared with the previous quarter ($19.5bn, 80 deals) and M&A activity in the region surpassed Q1 2012 levels ($9.2bn, 87 deals) by 101.4%.
Ruth McKee, Mergermarket’s Middle East correspondent says: “Drivers for regional M&A for the remainder of 2013 will include private equity firms who are looking to exit investments and for some bolt-on acquisitions for portfolio companies, as well as from corporates who are looking to expand regionally and internationally.
Mergermarket data shows that private equity deals in the MENA region were at their highest level by deal value in 2012 since the peak in 2007 ($5.2bn) – 17 deals valued at $2.7bn was also the second year to see an increase by deal value.
In recent interviews with Mergermarket the CEO of Saudi drinks company Al Rabie said it is seeking dairy and beverage buys in Africa and Asia, and the CEO of Saudi’s gourmet food company Bateel said it seeks an investor ahead of a planned IPO. The MD of the UAE chemical distribution and trading company Petrochem Middle East said it is seeking acquisitions in the Middle East and North Africa region.
Also key will be continuing Gulf government infrastructure spending and some cross-border deals by sovereign wealth funds are expected.”
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