Mena targets US as outbound M&A deals jump 53%

SPA/Reuters

• $30.6bn of deals agreed
• US was top target country
• PIF and Adia among top dealmakers

Entities from the Middle East and North Africa agreed deals to purchase companies outside the region worth almost $31 billion in the first half of 2023 as cash-rich sovereign wealth funds and other government-related bodies shrugged off rising interest rates to expand their foreign portfolios.

The outbound M&A total deal value was $30.6 billion, up from $19.6 billion a year earlier, while the number of such acquisitions rose by one-tenth over the same period, according to a report by consultants EY.

The United States was the top target for Mena buyers, who agreed 20 deals for US companies worth $22.2 billion.

Regional entities also agreed to acquire five Chinese companies for an aggregate $3.9 billion and seven Indian companies for a total of $700 million.

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Gulf sovereign wealth funds (SWFs) were among the leading dealmakers, especially Abu Dhabi Investment Authority (Adia) and Saudi Arabia’s Public Investment Fund (PIF).  

The biggest deal was the Adia-led purchase of US chemicals manufacturer Univar Inc for just over $8 billion.

Second was PIF subsidiary Savvy Games Group’s agreement to buy US video game developer Scopely for almost $5 billion, while another Adia consortium also landed Mena’s third-largest acquisition – of US tech firm Cvent Holding Corp for $3.5 billion.

The top inbound deal – the acquisition of a Mena company by an entity from outside the region – was Canada’s Brookfield Asset Management to buy UAE payments provider Network International Holdings for $2.6 billion.

Overall, Mena entities were involved in 318 new M&A deals in the first six months of 2023. This was down 14 percent year on year although the combined sales value declined only 0.4 percent to just under $44 billion.

The EY report attributes the slight slowdown in activity to a “dampened” economic outlook and recession fears, high interest rates and inflation, and geopolitical tensions.

“Dealmakers seemed to be adopting a cautious approach given the uncertain market conditions,” the report states.

By sector, technology was the top target, accounting for $15 billion of the total deal value, and $11 billion of outbound deals, followed by chemicals ($12 billion both total and outbound).

“Investor interest [in the former] focused mainly on cybersecurity, cloud computing, fintech and ecommerce, clearly indicating the segments that are poised to shape the future of the industry,” said Anil Menon, EY Mena head of M&A and equity capital markets.

The UAE was the top destination for acquisitions, with 82 deals worth a combined $6 billion, followed by Saudi Arabia’s 43 deals that had an aggregate value of more than $3 billion.

The same two countries also ranked first and second in the list of top bidders.

UAE buyers agreed 115 deals totalling $20 billion, while Saudi Arabian entities’ 53 acquisitions will be worth close to $15 billion once completed.

The number of domestic M&A deals in Mena fell 24 percent year on year to 138. The value of such deals fell 53 percent over the same period to $14 billion, EY data shows.