Middle East M&A activity surges as wealth funds use deals to build local champions

Middle East M&A activity surges as wealth funds use deals to build local champions

Middle Eastern sovereign wealth funds are using merger and acquisitions (M&A) to scale into new verticals and build local champions, Bain & Company said in its fifth annual Global Mergers & Acquisitions report.

The move will also strengthen partnerships, invest in the future and bolster the region, the report added.

Regional M&A activity rose nearly 39% in 2022, largely fueled by government-owned sovereign wealth funds. Combined, sovereign wealth funds and corporations represented 84% of deals, with private equity investors doing relatively few deals.

“With a strong economy buoyed by high oil prices, the Middle East is well positioned to rely on M&A to further advance the region’s long-term push to expand beyond hydrocarbons as well as globalise its companies,” the report noted.

“These are good times for the local economy, with expected regional GDP growth of 6.5% (7.6% in Saudi Arabia), the highest it’s been in more than a decade. The Middle East’s sovereign wealth funds are growing, too, and with a new government mandate, they have become a treasure chest for much of the M&A activity.”

The report cited Saudi Arabia’s Public Investment Fund (PIF) investing $1.3 billion in four Egyptian companies in August 2022, including Abu Qir Fertilizers and Alexandria Container and Cargo