Mena half-year mergers and acquisitions value climbs to record $112bn

Aramco's 70 per cent stake acquisition in Sabic drove deal values higher, according to Refinitiv

Saudi Aramco's acquired a 70 per cent stake in Sabic earlier this year. Reuters

The value of mergers and acquisitions in the Middle East and North Africa (Mena) climbed to a record $112 billion (Dh411bn) in the first six months of the year, driven by Saudi Aramco’s acquisition of a majority stake in Sabic, the region's biggest petrochemicals producer.

The 70 per cent acquisition of Sabic for $69bn by state-controlled oil and gas giant Aramco, helped boost the value of M&A deals 231 per cent year-on-year in the first half of the year, financial data provider Refinitiv said in a report on Monday.

Mena targeted and inter-Mena market transactions also currently stand at all-time highs of $101.2bn and $86.1bn, respectively, it noted.

While Mena inbound merger and acquisition deals stand at a record high of $15.1bn, outbound deals decreased to $4.6bn in the first six months of this year from $6.5bn in 2018.

Energy and power sector deals accounted for 80 per cent of the total deal value, followed by the financial sector with 13.7 per cent and a total of 44 transactions, ahead of 26 recorded in the energy and power sector, Refinitiv noted.

The Mena's financial sector has seen a sharp rise in mergers and acquisitions in recent quarters as lenders consolidate to better compete in tougher market conditions. GCC lenders are not only acquiring or merging with their domestic counterparts but also looking at cross-border deals within the region and beyond. Emirates NBD’s plan to purchase Turkey's fifth-largest lender, DenizBank, is one such example.

While mergers and acquisitions have seen a strong first half, capital raising through equity markets, has slumped to $1.1bn, a 73 per cent year-on-year decrease to the lowest level since 2004.

Initial public offerings accounted for 88 per cent of the region's equity and equity-related issuances with $923.2 million raised, Refinitiv noted. Arabian Centres IPO on Saudi Tadawul, which raised $658.6m is the biggest deal in Mena so far this year, it added.

Debt issuances in the first half of the year fell 12 per cent to $53.1bn from the year-earlier period. Saudi Arabia was the most active issuer in the region, accounting for 40.5 per cent of the total value of the debt, it noted.