UAE led the region in terms of M&A activity in 2023 –PwC

The UAE was among the top three countries in the region for M&A volumes in 2023, closing the most cross-border agreements in comparison with Saudi Arabia and Egypt, with 189 transactions,according to the latest PwC 2024 TransAct Middle East report (pdf). The three countries accounted for 381 transactions or 85.2% of the total transaction volume in the region, according to the consulting firm.

On the downside: All three countries saw a y-o-y drop in the number of transactions closed during 2023, with the UAE seeing a 14% y-o-y decline in transaction volumes. Regional M&A activity dropped 30% y-o-y by the end of 2023, largely attributed to the 60% y-o-y decline in Egypt’s transaction volumes.

Despite the decline, regional transactions held up well compared to global figures over the past two years, which saw volumes plummet by half, from over USD 5 tn in 2021 to USD 2.5 tn in 2023. The consulting firm attributed the comparative regional resilience to strong market fundamentals, and a supportive government policy environment.

The region favored smaller-sized transactions in 2023: Transactions valued at USD 100 mn or less comprised around 92% of disclosed volumes, according to the report, while transactions exceeding USD 500 mn accounted for less than 2%. Favoring smaller sized transactions was seen as a hedge against rising global interest rates and tightened debt market conditions.

Sovereign wealth funds and government entities drove activity, with UAE wealth funds looking to invest in “forward-looking sectors” both at home and abroad. The technology and renewable energy sectors, in particular, are drawing significant investments, according to the report. The private sector’s role is also gaining traction, with structural reform initiatives and increased IPOs contributing to investor interest in the region.

Transactions in technology, media, and telecoms saw a notable increase, according to the report, emphasizing increased investments in cybersecurity, cloud computing, and e-commerce. In the UAE, robust fiber connectivity and tech adoption make it a data center hub, attracting investments from Equinix and Moro Hub, according to the report.

Momentum expected to continue in 2024: “We anticipate that 2024 will be a year of growth and activity will be driven by economic diversification goals, decarbonisation, and a focus on localisation and value creation, as organizations transform their business models and look to expand capabilities,” PwC transactions markets leader Romil Radia said.

ON THE IPO FRONT-

Regional IPO activity also remains steady, with a promising pipeline expected in 2024, PwC Transactions Services Leader Imad Matar said.

REMEMBER- The UAE saw eight IPOs during the year, the second highest figure in the region, the report said, adding that it also saw the largest listing of the year — Adnoc Gas’ USD 2.5 bn IPO.