Bigger, bold M&A deals fuel transformative growth in Mideast region

In 2024, the Middle East’s mergers and acquisitions (M&A) market demonstrated remarkable resilience and confidence, driving strategic investments in sectors such as AI, renewable energy and infrastructure, according to a report by PwC Middle East.

According to the report, the region’s dealmaking landscape was driven by a growing emphasis on innovation and sustainability across various sectors.

Despite global headwinds, Middle East deals volumes experienced a modest decline of only 4% – from 493 deals in 2023 to 475 in 2024 – significantly outperforming the global market’s decline of 17% and showcasing the region’s resilience in M&A activity.

Large-scale transactions in Artificial Intelligence (AI), renewable energy and infrastructure have fueled the region’s M&A momentum and are expected to continue driving dealmaking, stated PwC Middle East in its latest TransAct Middle East report, titled, “Bold moves: Big bets, bigger growth,” highlighting key M&A in the Middle East in 2024.

Saudi Arabia, the UAE, and Egypt have accelerated initiatives to attract private sector investment.

Sovereign wealth funds and corporations are actively expanding their global footprint, positioning themselves for an even bigger push in 2025.

In the Middle East, there was a slight uptick in private equity (PE) deal volumes with inbound deals playing a significant role in PE activity, totalling 108 transactions.

While only one regional deal exceeding $1 billion was recorded in 2023, 2024 saw five such deals, with the largest reaching $3.6 billion highlighting growing investor confidence in the region, it added.

Romil Radia, Deals Markets Leader, PwC Middle East, said: “In 2024, the Middle East’s M&A market demonstrated remarkable resilience and confidence, driving strategic investments in sectors such as AI, renewable energy and infrastructure.”

“The region saw a notable rise in large-ticket deals, reflecting the bold ambitions of investors to accelerate regional diversification, bringing in new capabilities and strategic expertise to strengthen key industries and help develop the newer sectors,” noted Radia.

“Sovereign wealth funds and Middle East corporates are actively expanding their global footprint, positioning themselves for an even bigger push in 2025,” he added.

Key themes arose within the regional M&A market in 2024 with examples such as:

*Technology and AI drives business reinvention: Bayanat AI’s $1.5 billion acquisition of Al Yah Satellite Communication has reinforced its leadership in advanced technology. Moreover, Qatar’s Ooredoo secured $550 million to expand AI and data centre infrastructure, further strengthening the region’s digital transformation.

Meanwhile, Saudi Arabia’s ‘Project Transcendence,’ a $100 billion AI investment initiative, underscores the country’s long-term commitment to deep tech and innovation.

*Sovereign Wealth Funds (SWFs) continue to shape homegrown economic growth: SWFs continue to prioritise investments in local businesses, industries and projects, where dealmaking will likely increase in sectors critical to the region’s long-term economic goals.

This could lead to a greater number of domestic deals as companies look to align with national priorities and regulatory frameworks that support local development.

*Green energy transitions drive new investment strategies: Masdar’s $2.7 billion acquisition of Greece’s Terna Energy highlights the Middle East’s leadership in renewable energy, reinforcing its commitment to sustainability.

Increasing private participation aids diversification: Saudi Arabia’s healthcare sector now sees 53% of investments coming from the private sector, reflecting the country’s push toward economic diversification.

Meanwhile, Egypt’s historic $35 billion ADQ-led investment deal marks a significant step in its privatisation efforts, attracting foreign capital and fostering private sector growth across key industries.

According to PwC report, the global private equity market saw a surge in large-scale transactions, with the number of deals valued over $1 billion rising from 430 in 2023 to over 500 in 2024, driving an 11% rise in average deal sizes.

This reflects the global trend of increased asset supply expected to come to the market, driven by the increasing pressure on PE players to exit mature portfolio company investments. In the Middle East, there was a slight uptick in PE deal volumes with inbound deals playing a significant role in PE activity, totalling 108 transactions.

Additionally, while only one regional deal exceeding $1bn was recorded in 2023, 2024 saw five such deals, with the largest reaching $3.6bn highlighting growing investor confidence in the region, it stated.

The Middle East’s M&A landscape is expected to continue its expansion, with over 50% of regional CEOs planning acquisitions within the next three years.

AI, digital transformation, and sustainability are expected to drive dealmaking, while Saudi Arabia, the UAE and Egypt accelerate privatisation to attract private sector investment. Additionally, cross-border M&A and rising foreign investment are expected to reshape the market, further solidifying the region’s position as a global economic hub, he added.

The continued creation of new sectors and sustained investment in high-growth areas should provide globally-minded corporations with compelling incentives to invest in the region. These factors will empower dealmakers to unlock significant growth opportunities in 2025 and beyond.-TradeArabia News Service