Middle East M&A activity bucks global trend with 42 per cent rise

The Middle East and North Africa defied the global slowdown in mergers and acquisitions activity last year as the value of deals hit $44.8bn.

Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, was close to the top of the M&A rankings last year. Stephen Lock / The National

The Middle East and North Africa bucked a global slowdown in mergers and acquisitions (M&A) activity last year as the value of deals rose by 42 per cent to US$44.8 billion (Dh164.55bn) from the year earlier.

Big ticket deals in telecoms, oil and gas and finance were among the sectors leading the rise in activity value, according to Ernst & Young's regional mergers and acquisitions update, released yesterday.

Deal volumes fell by 4 per cent from 416 in 2011 to 398 last year.

"The increase in announced deal values in 2012 suggest that there may be an improvement in the valuation gap among buyers and sellers in the market in comparison to last year where total deal values were considerably lower," said Phil Gandier, the head of transaction advisory services for Mena at Ernst &Young. "Additionally, many businesses that restructured their capital back in 2011 left themselves well placed to finance and close deals in 2012."

The data suggests investment bankers in the region had a more profitable year than in other parts of the world. Jitters over the euro-zone crisis and the US fiscal cliff talks weighed on activity as the value of deals dipped by 8 per cent to $2.5 trillion. Volumes declined by 8 per cent.

Despite a choppy economic backdrop, an increase in regional deal activity was expected to be sustained this year as market conditions improved, said Mr Gandier.

The UAE topped the list of the most acquisitive countries. Investors in the Emirates were involved in $13.5bn worth of deals, followed by Qatar at $11.2bn and Kuwait with $3.9bn.

Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, was close to the top of the rankings with a $2bn investment in Centennial Asset Brazilian Equity Fund, owned by Eike Batista's EBX Group. The deal was a landmark transaction, and one of the biggest deals ever undertaken by a Middle Eastern investment company in Brazil.

Qatari firms were frequent buyers as Qatar National Bank (QNB) and Qtel set off on acquisition sprees across the region. QNB struck a $1.9bn deal for National Société Générale Bank, the Egyptian arm of France's second biggest lender.

Ernst & Young's data chimes with other results showing an increase in M&A activity in the region last year. Thomson Reuters said that deals in a more limited range of Middle Eastern countries doubled last year compared with a year earlier, reaching $20bn. The total transaction value was the highest level since 2008.