M&A on track for its best year since 2021 amid sovereign wealth fund push

Sovereign wealth funds (SWFs) are pushing global M&A activity to new highs, with volumes already surpassing the USD 3.5 tn mark this year, up 34% y-o-y, according to data compiled by Bloomberg. This puts us on track for the best M&A year since 2021, the business news information service said.

More than USD 1.3 tn in transactions were logged in 3Q, driven by a series of high-value mega plays. Much of that momentum came from our part of the world, where MENA-involved M&As brought in USD 157.3 bn in 9M across 963 transactions, up 166% y-o-y, driven by the UAE (USD 45 bn) and Saudi Arabia (USD 5.6 bn), according to LSEG data.

ICYMI- Some of the biggest plays YTD were SWF-backed: The Public Investment Fund (PIF) led a USD 55bn leveraged buyout of video-game maker Electronic Arts last month, marking the largest global transaction so far this year. Mubadala’s AI arm, MGX, followed with a USD 40 bn partnership with BlackRock to acquire Texas-based Aligned Data Centers. Rounding out the list, Abu Dhabi’s ADIA and Singapore’s GIC most recently took minority stakes in Blackstone and TPG’s USD 18.3 bn acquisition of medical-device maker Hologic.

SWFs also ❤️ AI: Abu Dhabi’s ADIA backed Thoma Bravo’s USD 12 bn takeover of HR software firmDayforce in August, while Mubadala’s MGX invested in OpenAI, xAI, and plans to join the Stargate venture. Meanwhile, Singapore’s GIC and Qatar’s QIA invested in rival AI firm Anthropic.

Cutting out the middle-men: Gulf SWFs are increasingly taking matters into their own hands, expanding in-house investment teams to execute transactions directly rather than relying on Wall Street intermediaries, Bloomberg wrote. The shift gives them greater control, lower fees, and access to co-investment rights alongside major private equity players.

The award for the most active sector for M&A in the region goes to: materials, which remained the top-performing sector in MENA M&A in terms of value, contributing USD 32.6 bn, or 57% of total regional transaction value. Momentum came largely from heavyweight corporates rather than sovereign funds, including ADNOC and OMV’s planned merger of Borouge and Borealis into a USD 60 bn chemicals giant, which also includes a USD 13.4 bn acquisition of NOVA Chemicals still pending completion. It was followed by energy and financials at USD 4.6 bn each.

Outlook is rosy for next year: Bankers expect the M&A rally to carry into 2026 as sovereign funds and corporates continue to deploy record dry powder, with both already scouting new targets. Goldman Sachs sees dealmaking momentum accelerating into year-end, with next year potentially setting a new global record.

MARKETS THIS MORNING-

Asian markets are mostly in the green this morning on news that US President Donald Trump will meet Chinese President Xi Jinping next week, with South Korea’s Kospi leading gains with a c.2% rise, followed closely by Japan’s Nikkei. Over on Wall Street, futures are little changed as investors await September inflation data.

THE CLOSING BELL-

The DFM rose 0.7% yesterday on turnover of AED 787.2 mn. The index is up 16.6% YTD.

In the green: Al Mal Capital REIT (+14.1%), International Financial Advisors (+10.0%) and Al Mazaya Holding Company (+9.4%).

In the red: Dubai Refreshment Company (-9.6%), Emirates Investment Bank (-8.8%) and Chimera S&P UAE Shariah ETF — Share class B — Income (-5.7%).

Over on the ADX, the index fell 0.4% on turnover of AED 1.2 bn. Meanwhile, Nasdaq Dubai was down 0.1%.