Mergermarket is hosting its Middle Eastern M&A and Private Equity Forum today. Among the themes being discussed today there are the drivers that spur growth in the region, deals made by family owned companies, emerging markets opportunities as well as private equity developments.
While M&A deal flow in the Middle East (excl. Israel) in Q1 2014 ($2 billion) was down 31 per cent from $2.9bn in Q1 2013, activity in Q1 2014 managed to double the Q4 2013 value of $1 billion, according to Mergermarket data.
Mergermarket's deals database shows that the value of the top five transactions alone made up 85.3 per cent of the total M&A value in the region during Q1 2014. The top deal was the acquisition of the Qatari based Barwa Bank by Qatari Diar Real Estate Investment Company, for $0.7 billion.
Tom Thraya, Partner and Head of Baker & McKenzie'sUAE Corporate/M&A Group, said: "Thanks in part to our global footprint, we have continued to see a significant volume of inbound mandates into the UAE from multinationals. Since our merger with Habib Al Mulla went live in July, we have advised on an increasing number of domestic, regional and outbound FDI work for UAE corporates, coupled with a noticeable uptick in interest in listings both in the UAE and cross-border."
Foreign investments into the region have seen a dramatic change with deals valued at $0.5 billion in Q1 2014, over twelve times the value seen in Q1 2013 ($41 million). The Netherlands invested almost half of the total inbound value in the region ($200 million) resulting in Q1 2014 being the highest Q1 in six years ($3.3 billion in 2008), according to Mergermarket data.
Local investors' increasing appetite for foreign targets contributed to the highest valued Q1 for outbound deals since Q1 2009 ($9.6 billion). Q1's outbound value, worth $6.6 billion, was up 104.2 per cent compared to Q1 2013 ($3.2 billion). Excluding 2008, the United Arab Emirates has been the most active outbound investor for eight years, accounting for a total of $4.4 billion (67 per cent of the total outbound value).
Looking ahead in 2014 IPO activity in the GCC is set to increase as markets become more buoyant and international investors increase their interest in the region. A number of offerings have already been announced, Ruth McKee, Head Middle East and North Africa for Mergermarket said.
In private equity new funds and fresh deals are expected in MENA this year and geographies of particular interest are Saudi Arabia, UAE and Turkey, McKee added. "The defensive sectors continue to remain a large focus for a number of players who are seeking buys in consumer, healthcare and education. Family businesses are also showing interest in the same sectors."