More than half of regional CEOs are eyeing M&A transactions over the next three years -PwC

Regional M&A activity set to pick up over the next three years -PwC survey: Corporate divestitures, regional expansion and portfolio expansion are among the key trends expected to support regional M&A activity, which is expected to pick up after a sluggish 2024, PwC said in its latest report (pdf), citing LSEG Refinitiv data. While the region saw a 4% y-o-y decline in volume of M&A activity in 2024, which is still narrower than the 17% global decline, a PwC annual CEO survey showed that more than half of regional business leaders plan to engage in M&A transactions in the next three years.

ICYMI- EY recently said that the MENA region saw 701 M&A transactions last year, worth USD 92.3 bn, with the bulk of activity being in the GCC.

The decline came amid a dip in cross-border transactions: Cross-border outbound transactions declined 32% y-o-y to 191 transactions in 2024, with the culprits being high valuations, stricter regulations, and unfavorable market conditions. “Despite these challenges, regional champions, such as the UAE’s Mubadala and Saudi Arabia’s PIF continued their global expansion, acquiring assets across Europe, Asia, and North America.” Inbound transactions also continued their multi-year decline, falling 7% y-o-y to 182 transactions last year.

This might not last too long: “The push to develop energy infrastructure, leisure, and tourism assets is expected to create new opportunities for inbound investment,” the report said.

In other good news: appetite is strong for big-ticket transactions. Last year saw five transactions worth over USD 1 bn across the region, up from just one in 2023, with the largest reaching USD 3.6 bn. “The region saw a notable rise in large-ticket [transactions], reflecting the bold ambitions of investors to accelerate regional diversification, bringing in new capabilities and strategic expertise to strengthen key industries,” said Romil Radia, deals market leader at PwC Middle East.

Foreign PE interest also strengthened, highlighted by Main Street Capital’s USD 40 mn investment in UAE’s Gulf Manufacturing to support its acquisition of Maass Global Group, and TA Associates’ acquisition of a majority stake in Dubai’s AlephYa Education. Private equity transactions accounted for 44% of total transaction volume. Still, corporates continued to dominate activity in 2024, representing 56% of total volume, with corporates favoring intra-regional transactions.

Sovereign wealth funds topped investor charts during the year, with Mubadala investing USD 29.2 bn across 52 transactions in AI, telecom infrastructure, logistics, and data centers, among others, the report said, adding that other notable active SWFs include Saudi Arabia’s PIF and the Qatar Investment Authority (QIA).

Industrial transactions dominated activity, accounting for 110 transactions — the highest number across all sectors, the report said, highlighting Adnoc’s USD 3.6 bn acquisition of OCI’s 50% + 1 share stake in Fertiglobe. This was followed by consumer markets and financial services tied for second spot, with 103 transactions each.

Artificial intelligence + green energy are leading trends: Some of the most notable transactions in AI-driven solutions include Presight AI Holding’s acquisition of an 11% stake in Athletic Intelligence Quotient (AIQ) from Adnoc for USD 350 mn.. Another key trend driving investments in the regional M&A industry is green energy, highlighted by Masdar’s acquisition of a majority stake inTerna Energy for USD 2.7 bn, the report said.

MARKETS THIS MORNING-

Asian markets are broadly in the green, with Japan’s Nikkei up 0.14%, South Korea’s Ksopi up 0.13%, and Hong Kong’s Hang Seng index up 0.1%. Meanwhile, China’s CSI 300 is flat. Over on Wall Street, futures are higher, indicating a possibly good week for US indices, after closing last week in the green and recovering from four weeks of losses.

THE CLOSING BELL-

The ADX remained flat on Friday on turnover of AED 1.6 bn. The index is down 0.5% YTD.

In the green: Americana Restaurants International (+4.4%), Abu Dhabi Commercial Bank (+2.6%) and NMDC Group (+2.1%).

In the red: Hayah Ins. (-5.8%), Multiply Group (-5.5%) and Abu Dhabi National Hotels (-4.7%).

Over on the DFM, the index fell 1.2% on turnover of 933.4 mn. Nasdaq Dubai was up 0.2%, and up 0.8% YTD.

CORPORATE ACTIONS-

Dewa shareholders approve AED 3.1 bn dividend for 2H 2024: The Dubai Electricity and Water Authority (Dewa) approved a total dividend payment of AED 3.1 bn, equivalent to 6.2 fils per share for 2H 2024, bringing total dividends for the year to AED 6.2 bn, according to a DFM disclosure (pdf).

BHM Capital proposes 15.32% bonus share issuance: BHM Capital proposed distributing 15.3% of its paid-up capital as bonus shares to shareholders, according to a bourse disclosure (pdf). The proposal involves issuing 26.6 mn new shares, aiming to enhance liquidity and increase shareholder equity without affecting the company’s cash reserves.

Fujairah Building Industries approved a 30% cash dividend for shareholders for 2024, totaling AED 40.7 mn, according to an ADX disclosure (pdf).

RAK Ins. approved a special resolution to release funds from its voluntary reserve to offset accumulated losses, according to a bourse disclosure (pdf). Additionally, shareholders opted not to distribute dividends for the period.

PureHealth’s board has approved the early settlement of AED 1.9 bn in banking facilities obtained from First Abu Dhabi Bank, according to an ADX disclosure (pdf). The firm said that it was considering the move last week.