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UAE garners 70 private equity deals this year

Private equity deal value in Middle East on the rise

Published: Thu 10 Oct 2024, 12:30 PM

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The UAE has recorded the second-largest number of private equity deals in the Middle East so far this year, a new report showed.

According to S&P Global Market Intelligence, private equity and venture capital investments in the Middle East have increased so far in 2024, targeting businesses that are outside the oil and gas sector.

The Middle East —comprising 12 countries including Saudi Arabia, the UAE and Iran — attracted $2.28 billion for the third quarter to Sept. 27, according to S&P Global Market Intelligence data. The amount is already slightly higher than the $2.16 billion deal value for the full second quarter and nearly double the $1.19 billion in the first quarter.

However, the annual total is likely to fall short of the $11.60 billion of capital attracted in 2023, particularly given the backdrop of continuing military conflict in the region, S&P said in its report.

For the year to Sept. 27, Israel had the most deals in the region with 150 private equity-backed transactions, followed by the UAE with 70 and Saudi Arabia with 47.

The technology, media and telecommunications industry recorded the most activity with 124 deals totaling over $2.15 billion. Real estate had the second-largest deal value at $752 million, followed by the industrial sector with $741 million. Energy and utilities ranked the lowest with only two undisclosed deals even with rising private equity investment in global fossil fuel and renewable energy companies this year.

Real estate, industrials, GenAI make up top 3 deals

The region's largest deal so far this year is the acquisition by Lunate and Olayan Financing Co. WLL of a 49 per cent stake in ICD Brookfield Place from Investment Corp. of Dubai and ICD-Brookfield Management Ltd. for $735 million. After the deal closed, Lunate and Olayan each owned a 24.5 per cent stake in the Dubai-based business centre.

The second-largest deal is Apollo Global Management Inc.'s planned $600 million purchase of a 50 per cent stake in iron blending and distribution company Vale Oman Distribution Centre LLC. The Vale SA subsidiary operates a maritime terminal in Sohar, Oman, with an integrated iron ore blending and distribution center that has a nominal capacity of 40 metric tons per year.

The third is Silver Rock Group's $325 million investment in UAE-headquartered generative AI company Pathfinder Global FZCO.

Green energy investment bottlenecks

Renewable energy projects in the Middle East have taken a backseat this year as armed conflict remains the most pressing concern, according to Baker Institute's Middle East Outlook report.

Additionally, certain renewable energy projects such as green hydrogen production, are unattractive for investors and developers, according to Ian Palmer, an oilfield engineer and partner at Higgs-Palmer Technologies LLC. "[The] future of hydrogen is limited by time and cost because its main application is in hard-to-abate industries like aviation, shipping and manufacturing of steel and cement," Palmer wrote in an email to Market Intelligence.

Potential investments to capture and store carbon emissions from industrial processes such as steel and cement production, as well as from fossil fuel combustion in power generation, also have limitations in the Middle East. "Carbon capture and storage won't save oil and gas because it would require an industry as big as [the oil and gas] industry," Palmer wrote.



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