Omar Momany, Head of Corporate/M&A at Baker McKenzie Habib Al Mulla
DOHA: Middle East’s overall M&A deal activity rallied in Q4 2017, with the volumes growing by 8 percent and aggregate value up by 21 percent at $6.6bn, compared to the previous quarter. Cross-regional M&A deal volumes also increased by 8 percent, while deal values increased by 85 percent from Q3 2017, driven by the $1.06bn acquisition of Kuwait’s National Petroleum Services Co, according to global law firm Baker McKenzie.
Eighty percent of all Middle East M&A activity was cross-border in nature in Q4 2017. Total Middle East deal volumes fell 10 percent in 2017, compared to the previous year, with deal values also declining by 31 percent.
“Despite overall deal activity in the Middle East decreasing in both value and volume in 2017, the rally witnessed in the last quarter of the year was very positive,” said Omar Momany, Head of Corporate/M&A at Baker McKenzie Habib Al Mulla. “The increase in cross-border M&A deals by value and volume in the last quarter of 2017 reflect the sustained investor appetite in the Middle East”, he said.
The value of cross-regional deals targeting the Middle East increased significantly by 194 percent to $1.9 bn in Q4 2017 from $630m in the previous quarter, driven by the National Petroleum Services acquisition. Deal volume also rose by 35 percent, with a total of 31 deals during the same quarter.
Kuwait was the top target country by value, with $1.2bn from three deals. The US was the top bidder country both by volume and value during the same quarter, with six deals valued at $1.2bn. The Energy & Power sector was the most active sector in respect of inbound Middle East investment, both by volume and value in Q4 2017, registering seven deals amounting to $1.3bn.
“We expect regional deal activity to remain fairly consistent in the coming years, with particular interest in the consumer-facing, infrastructure and technology sectors driven by the demand for innovation and new business models,” commented Will Seivewright, Corporate/M&A Partner at Baker McKenzie Habib Al Mulla. By value, outbound cross-regional deals from the Middle East increased by 52 percent in Q4 2017 to $2.3bn compared to $1.5bn from the previous quarter. However, this was generated from fewer deals (37 deals), representing a 10 percent decline in volume from Q3 2017.
The top target countries for outbound M&A by volume included the United Kingdom, United States, Spain and Italy with three deals each, while India was the top target country by value, with two deals valued at $1bn, including the acquisition of the Indian unit of National Investment & Infrastructure Fund Ltd by the Abu Dhabi Investment Authority.
The Industrials sector was the most active sector both by volume and value of deals originating from the Middle East, with a total of 10 deals valued at $1.03bn.
Zahi Younes (pictured), Corporate/Capital Markets partner at Baker McKenzie’s associated firm added, “Unprecedented economic reforms, openness to foreign investment and future infrastructure requirements in the Middle East are going to present enormous opportunities in the medium and long term and continue to sustain levels of regional M&A activity.”
