PWC Report: Gulf exceptionalism creates M&A opportunities in the Middle East region despite global headwinds

PWC Report: Gulf exceptionalism creates M&A opportunities in the Middle East region despite global headwinds 

Report highlights key M&A trends for 2023 and what companies can do to make transformational deals, showing that the Middle East is a rare global sweet spot for M&A for companies that have the right strategies and financial resources to make transformational deals. Technology, energy, food processing, healthcare and education sectors were the top IPO deals drivers in the region. 

Key Stats: 

  • A total of 632 M&A deals had been recorded in the Middle East in 2022
  • 89% of the region’s total deal volume was collectively recorded in the UAE, Saudi Arabia and Egypt

PwC Middle East released its 2023 TransAct Middle East report titled, “Gulf exceptionalism creates M&A opportunities despite global headwinds,'' which offers insights on the Merger & Acquisition (M&A) and Capital market activity across the Middle East region during 2022 and the trends being seen that will potentially impact M&A activity going forward. 

According to the report

M&A activity in the region has shown a remarkable exception to the general pattern of the slowdown in global M&A deal activity. It has successfully maintained an impressive upward trajectory in 2022, with a series of  $1bn-plus transactions taking place across different industries. This is owed to ‘Gulf exceptionalism’, which is due to favourable regional dynamics such as elevated oil prices and increased fiscal discipline that contributed to greater economic flexibility and relatively higher growth in the region. Moreover, the majority of Middle East M&A activity in 2022 was concentrated in the UAE, Saudi Arabia and Egypt, which collectively recorded 563 deals, or 89% of the region’s total deal volume.

The UAE and Saudi Arabia witnessed the fastest year-on-year increase in deals, with volumes rising respectively by 9% and 6%. In the UAE, deal activity mainly focused on consumer markets, technology, industrials and financial services, supporting the country’s drive to diversify away from oil and gas.

Fundraising continued to drive capital flows in 2022, with the region remaining an attractive target for venture capital (VC) funds. Some of the major emerging M&A themes of 2022 include:

  • Deep resources available to support M&A investments
  • Higher interest rate environment should stimulate increased focus on value creation
  • Strong focus on technology and infrastructure
  • Cross-border M&A continues, building up national and regional champions
  • The energy transition is creating new M&A opportunities

Romil Radia, Regional Deals Markets Leader at PwC Middle East commented:“The Middle East is certainly not immune to the economic headwinds affecting M&A elsewhere, but at the start of 2023, the mood here is more optimistic than most global markets and some momentum from last year has continued into 2023. In its favour, the region has deep financial resources available for deals, which is supporting outbound and cross-border transactions. There is also enormous potential around the energy transition, and a strong focus on tech and digital acquisitions as transformation programmes continue regionally.”

According to the report, current market conditions in early 2023 suggest that the Middle East is a rare global sweet spot for M&A, as long as companies have cohesive strategies and the right financial resources to make transformational deals.

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