The outlook for private equity (PE) dealmaking in the MENA region in 2025 is cautiously optimistic, with expectations that reduced regulatory pressures and a supportive investment climate will create favorable conditions for dealmaking in high-growth sectors, according to Magnitt’s MENA PE report (pdf).

PE firms are likely to focus more on exits as investors prioritize liquidity and returns, taking advantage of improved financing options. Although global economic risks persist, the shifting market landscape presents opportunities for investors to adjust their portfolios and seize value during this transition.

2024 IN REVIEW-

PE investments took a hit in 2024, with Magnitt attributing the decline to tightening credit conditions, valuation mismatches, and global macroeconomic uncertainty. The region saw just 68 PE transactions in 2024, down from 90 in 2023 and 97 in 2022, marking the lowest total in three years. Transaction value also dropped sharply to USD 4.9 bn from USD 8.1 bn in 2023, reflecting fewer large-cap transactions. This slowdown was compounded by a lack of LBOs, a key driver of PE growth between 2020 and 2021, as higher interest rates increased debt financing costs.

Saudi Arabia and the UAE were the region's leading PE markets, with mega-transaction (over USD 1 bn) comprising just 47% of total transaction value, down from 77% in 2023, signaling a shift away from high-value acquisitions. Saudi Arabia accounted for 58% of MENA’s total PE transaction value last year, while the UAE contributed 30%, and Egypt 12%. Saudi Arabia has outpaced the UAE in transaction value for the last two years.

Growth investments dominated last year, with 71% of PE activity focused on acquiring minority stakes in growth companies, up from 54% the previous year. This shift reflects changing market dynamics and evolving investor preferences. In contrast, buyouts fell to 29% of PE transactions, down from 46% in 2023, and there were no leveraged buyouts in 2024 or 2023.

Despite these challenges, sectoral trends remained resilient, with healthcare (19%), finance (16%), and food and beverage (13%) sectors accounting for the majority of MENA’s PE activity, with healthcare reclaiming the top spot after losing it for two years.

MARKETS THIS MORNING-

Asian markets are mixed in early trading this morning, the Shanghai Composite is down 0.3%, the Hang Seng is down 0.2%, and the Kospi is looking at losses of 0.9%. Meanwhile, Japan’s Nikkei is flat.

TASI

12,233

-0.6% (YTD: +1.6%)

MSCI Tadawul 30

1,533

-0.7% (YTD: +1.5%)

NomuC

31,286

+0.04% (YTD: -0.6%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

5.0% repo

4.5% reverse repo

EGX30

30,632

-0.1% (YTD: +3%)

ADX

9,643

+0.3% (YTD: +2.4%)

DFM

5,352

+0.2% (YTD: +3.8%)

S&P 500

5,956

0.0% (YTD: +1.3%)

FTSE 100

8,731

+0.7% (YTD: +6.8%)

Euro Stoxx 50

5,528

+1.5% (YTD: +12.9%)

Brent crude

USD 72.53

-0.7%

Natural gas (Nymex)

USD 3.91

-6.4%

Gold

USD 2,932

+0.1%

BTC

USD 84,228

-4.4% (YTD: -9.9%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.6% yesterday on turnover of SAR 5.8 bn. The index is up 1.6% YTD.

In the green: Chubb (+10%), Naseej (+9.6%) and East Pipes (+4.1%).

In the red: Saudi Ceramics (-5.3%), Yansab (-4.2%) and SIIG (-3.3%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.04% yesterday on turnover of SAR 28.1 mn. The index is down 0.6% YTD.

In the green: Mulkia (+10%), Alrazi (+9.5%) and SPC (+9.4%).

In the red: Bena (-9.7%), Amwaj International (-7.7%) and Meyar (-6.1%).

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