There are 632 M&A deals recorded in the Middle East in 2022. What does that mean for investors and business owners in the region?
The Middle East is exceptional amid a global slowdown in M&A (mergers and acquisitions) deals. In the latest 2023 TransAct Middle East report by PwC Middle East, the Middle East sees a promising trend in M&A opportunities after having 632 M&A deals recorded in 2022.
According to the report, the region witnessed over $1 billion in transactions across different industries. This is owed to the region’s abundant resources—oil and gas—that contributed to greater economic flexibility and relatively higher growth. Moreover, most Middle East M&A activity in 2022 was concentrated in the UAE, Saudi Arabia and Egypt, which recorded 563 deals—89 percent 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 percent and 6 percent. 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.
“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,” says Romil Radia, Regional Deals Markets Leader at PwC Middle East. “In its favor, the region has deep financial resources available for deals that support 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 programs continue regionally.”
The story of transformation in the Middle East centers on its efforts to reduce its dependence on oil and gas revenues and build more diversified “knowledge economies”. The COP 27 summit in Egypt last year and the upcoming COP 28 in Dubai in December 2023 create a backdrop for this transition. A landscape for “green” M&A is emerging, as the GCC’s ambitious net-zero targets are expected to create significant opportunities for dealmakers in areas such as solar power, recycling, and energy storage.