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UAE, Saudi emerge as top Mena investor destinations

M&A deals worth $9.8b inked in H1

The UAE and Saudi Arabia were the preferred destinations for investors with 152 merger and acquisition deals hitting a total disclosed value of $9.8 billion as the Mena region witnessed a slight increase in M&A activity in the first half of 2024.

The UAE registered the region’s largest transaction with the acquisition of Truist Insurance Holdings by Clayton Dubilier & Rice, Stone Point Capital and Mubadala Investment for $12.4 billion

Both countries, the two largest Arab economies, were also among the top Mena bidder countries in terms of deal volume and value, indicating their active participation in the region’s M&A landscape, according to the EY Mena M&A Insights H1 2024 report.

The Mena M&A activity rose to 321 deals amounting to $49.2b. When compared to H1 2023, deal volume this year grew by 1.0 per cent, while deal value saw a rise of 12 per cent.

Sovereign wealth funds (SWFs), such as Abu Dhabi Investment Authority (Adia) and Mubadala from the UAE and the Public Investment Fund (PIF) from Saudi Arabia, continued to lead the deal activity in the region to support their countries’ economic strategies.

“Dealmaking got off to a promising start in 2024 despite oil price fluctuations. We saw a surge in cross-border M&A value as companies made investments to further build synergies, expand market presence, and gain strategic advantages on a global scale. In particular, the first half of the year found the UAE to be a favoured investment destination due to its business-friendly regulations and efficient legislative framework,” said Brad Watson, EY Mena Strategy and Transactions Leader.

Watson said Mena countries continued to strengthen regional relationships with Asian and European countries, alongside existing ties with the US, enabling them to gain access to larger and growing markets.

During the first six months of 2024, cross-border M&As played a significant role, contributing to 52 per cent of the overall volume and 87 per cent of the value, marking a 15 per cent y-o-y growth in value. Meanwhile, domestic M&A activity accounted for 48 per cent of the total number of deals.

The US remained the preferred target destination for Mena outbound investors with 19 deals amounting to $16.6 billion. With the US-UAE Business Council playing an active role in promoting partnerships, prominent US companies are collaborating with UAE public and private sector stakeholders on various initiatives.

Ten of the Mena region’s highest-valued M&As in the first six months of 2024 were concentrated in the GCC region. The largest transaction took place in February 2024, when Clayton Dubilier & Rice, Stone Point Capital and Mubadala Investment announced their acquisition of Truist Insurance Holdings for $12.4 billion. In March 2024, PAG, Mubadala and Adia invested $8.3 billion in a 60 per cent stake in the Chinese shopping mall company Zhuhai Wanda Commercial Management Group. In June 2024, Abu Dhabi Future Energy Company (Masdar) agreed to acquire a 67 per cent stake in the Greek company Terna Energy for $2.9 billion.

Insurance and real estate were the most attractive sectors for investors in the first six months of the year, accounting for 47 per cent of the total deal value. Saudi led in the lists of target countries as well as bidder countries, with the UAE, Morocco, Bahrain and Egypt featured in both rankings as well.

The first half of 2024 saw 155 domestic deals with a combined disclosed value of $6.4 billion, marking a 13 per cent increase in M&A activity. GCC players were involved in 85 per cent of the deals, reflecting a high level of intra-regional M&A activity. There were 94 deals within and between the UAE and Saudi Arabia, accounting for 61 per cent of the overall domestic M&A deal volume.

The real estate (including hospitality and leisure) sector became the main contributor to deal value with 15 deals amounting to $1.3 billion, driven by increasing tourism, upcoming mega projects and a growing middle-class income. The consumer products and technology sectors witnessed 47 deals in the domestic market, representing 30 per cent of the total volume.

“M&A, in the recent past, has been the beneficiary of significant tail winds such as low cost of capital. It is heartening to see regional M&A activity remain robust despite the higher cost of capital. The resilience of the regional M&A markets is underpinned by stable oil price and continued infrastructure spending by local governments," said Anil Menon, EY Mena head of M&A and Equity Capital Markets Leader.