Mergermarket hosted its Middle Eastern M&A and Private Equity Forum this Monday, which left senior-level participants with a positive outlook concerning IPO activities in the region as well as hope for exploring investment opportunities for dealmakers in the year ahead.
After 2013 reached the highest value for M&A in the region since 2007, there is a positive attitude towards a robust pipeline for deals to be made during 2014. Countries such as Qatar are having an active start to the year in line with the global surge in M&A - two deals in the country during 2014 are valued at $657 million, already surpassing the two deals in 2013 that totaled $531 million, resulting in the highest deal value for the country since its peak in 2010, according to Mergermarket data. Saudi Arabia is another positive example with four deals amounting to $394 million in Q1, up from three deals the same time last year.
Phil Gandier, MENA Head of Transaction Advisory Services, EY, said: "Our latest MENA Capital Confidence Barometer sees a number of indicators supportive to the transaction environment; such as a strong growth outlook underpinned by growing levels in MENA business confidence compared to a year ago. This, combined with easy credit access, robust earnings expectations and a strong liquidity position is likely to encourage MENA companies to pursue acquisitions domestically as well as in developed markets throughout the course of the year."
Findings from the panel discussions revealed that sectors such as infrastructure, real estate, pharmaceuticals and consumer retail are flourishing, with small and medium-sized deals also afoot. Family businesses are providing ample opportunity for deal making while joint ventures continue to be a catalyst for growth. Mergermarket is seeing investment from strong established players based in the UAE spreading further and further into the MENA region. For example, Abu Dhabi National Energy and Arabtec Holding each described how they are investing in countries that experience instability, such as Egypt and Tunisia, providing much-needed investor confidence in those countries.
Elaine Green, Senior Deputy Editor, Mergermarket (EMEA) and the chairperson of the event, said: "Speakers agreed that MENA is on a strong M&A growth trajectory spurred by population increases in many markets, especially the UAE, where there has been an increase in the expatriate community and an influx of foreign direct investment. Whilst deal value at $2.1 billion value in Q1 was down by 62.5 per cent compared to Q1 2013, panelists agreed that the valuation gap has narrowed. Moreover, with some multi-billion deals in the pipeline in sectors such as energy and telecoms deal value for Q2 2014 is expected to experience a substantial leap. For example Etisalat's $5.7 billion acquisition of Maroc Telecom will soon be finalised."