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Middle East a unique ‘global sweet spot’ for merger and acquisition: Survey

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Saudi Arabia is anticipating a significant increase in merger and acquisition activity in 2023

According to the most recent research from global consultancy PwC, the Middle East is a unique “global sweet spot” for merger and acquisition (M&A) activity, given the current market conditions.

The firm stated in its 2023 TransAct Middle East report headlined, “Gulf exceptionalism presents merger and acquisition prospects amid global challenges,” that the companies need to prepare well-thought-out plans and guarantee financial resources to achieve transformational deals.

Even if the businesses must be daring, the report stated that in a time of uncertainty, careful consideration must be given before making a decision.

Imad Matar, Deals Partner at PwC Middle East in Saudi Arabia, while interacting with Zawya, stated that despite a healthy pipeline of IPOs, Saudi Arabia is anticipating a significant increase in merger and acquisition activity in 2023.

“Saudi Arabia is expecting a further pick up in merger and acquisition 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,” remarked the official.

Saudi Arabia’s Public Investment Fund (PIF) will continue to drive domestic and international projects, as per the PwC report.

Over the next four years, oil-producing Middle Eastern nations could make an additional USD 1.3 trillion in revenue, according to the International Monetary Fund (IMF).

According to the research, the Middle East currently has abundant resources for merger and acquisition investments. However, the region’s sovereign wealth funds (SWFs) have a lot of dry powder because of the region’s generally high oil prices.

At the same time, dealmakers in the area and around the world are finding the Middle East’s transformation story, driven by new technology, to be more and more enticing. This reflects the Middle East’s merger and acquisition landscape’s significant emphasis on technology and digital infrastructure across all sectors.

UAE & Saudi Arabia Are At The Top

PwC estimates that in 2022, most Middle East merger and acquisition activity was focused in the UAE, Saudi Arabia, and Egypt, which registered 563 agreements or 89% of the entire deal volume in the region.

While volumes increased by 9% and 6%, respectively, the UAE and Saudi Arabia saw the most significant year-over-year agreement growth but remained below levels in 2021.

Dealmaking in the UAE concentrated on the consumer market, technology, industry, and financial services.

The Saudi PIF, on the other hand, completed several sizeable transactions in 2022, including the USD 1.5 billion purchase of a 17% share in Kingdom Holding Company and the USD 250 million purchase of 30% of Saudi Tabreed, a division of the publicly traded National Central Cooling Company in the UAE.

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