Holding course in the crosswinds

The Middle East entered 2026 with real economic momentum. The International Monetary Fund (IMF) had projected growth across Middle East and North Africa (MENA) to strengthen to of 3.9%, from 3.4% in 2025¹, supported by recovering oil output, resilient non-oil sectors and largely contained inflation. Deal activity initially reflected that confidence, with 148 transactions recorded in Q1 2026, broadly in line with 146 a year earlier, even as conditions began to shift later in the quarter.

The first half of the year, however, tested that momentum. From late February, heightened geopolitical uncertainty affected energy flows in the region, pushed oil prices sharply higher, with Brent crude moving from around US$72 to nearly US$120 at its peak² and led investors to reassess risk and the cost of capital. The International Monetary Fund (MF) subsequently lowered its 2026 growth forecasts³, with several planned listings being deferred4 amid increased market uncertainty.

Against this backdrop, the deal market recalibrated, rather than stalled. The region recorded around 272 deals in the first half, down roughly 8% year-on-year – a moderation that points less to a loss of confidence than to a more selective market shaped by uncertainty. 

Figure 1: Middle East deal volume by country (H1-2024 to H1-2026e)

Activity was led by mid-sized transactions, with the market showing resilience, but limited scale at the top end. 

• No transaction crossed the US$5 billion mark;

• More than nine in 10 disclosed-value deals were below US$100 million;

• Financial services, one of the region’s largest sectors by volume, fell from 75 deals to around 53, as higher funding costs and a more cautious operating environment weighed on appetite.

The global market told a different story. According to PwC's Global M&A Industry Trends, global deal value is on track to reach approximately US$4 trillion in 2026, up around 13%, driven by megadeals accounting for close to half of that value. Global deal volumes, however, are forecast to fall around 13% over the year. The region, without a megadeal tier of its own, felt the half through volume rather than value. 

Figure 2: Number of deals breakdown by values (H1-2024 to H1-2026e)

Corporate acquirers held steady at 167 deals, while private equity eased to around 105. The largest transactions were led by corporate, sovereign-linked and infrastructure capital while private equity concentrated in the lower and mid-market. 

Regulatory reforms continued to reduce friction even as conditions tightened, with the UAE's maturing merger-review framework⁵, faster digital licensing and Qatar's move towards broader foreign ownership improving diligence and pricing certainty for domestic and strategic dealmakers⁶.

Figure 3: Middle East deal volume by transaction type (H1-2024 to H1-2026e) 

2.1 Capital moves towards strategic assets – energy and infrastructure take the lead 

In a period of geopolitical uncertainty, the largest mid-year transactions concentrated around utilities, power and operating infrastructure – assets that generate predictable cash flows and clear strategic value.  

In the UAE, Dubai Electricity and Water Authority’s acquisition of a further 24% stake in Emirates Central Cooling Systems Corp PJSC for approximately US$1.4 billion⁷ was the largest deal during the first half of the year, and the only one above US$500 million.  

In Saudi Arabia, ACWA Power completed the purchase of a 32% stake in the Shuaibah water and power company for US$224.8 million⁸, moving a contracted utility asset from a sovereign holder to a listed operator. 

ADNOC Drilling acquired 80% of Oman's MB Petroleum Services for US$204 million⁹, extending energy-services capacity across the countries of the Gulf Cooperation Council (GCC). 

In the region, the localisation agenda also gathered pace.  Aldar's US$177 million acquisition of an industrial and logistics portfolio from AD Ports Group¹⁰, alongside Mair Group's purchase of the associated warehouse assets for US$80.3 million¹¹, moved operating infrastructure into private hands.   

AD Ports Group further deepened its position in trade logistics, raising its stake in Global Feeder Shipping to 81% through an additional 30% acquisition valued at US$299.5 million¹², an asset that maintained trade connectivity through the period's disruption even as other operators pulled back.  

Continued domestic consolidation across industrial and construction materials, including Man International Steel Industries’ US$102 million acquisition of National Pipe Company¹³, reflected sustained investment in national industrial capability.  

This pattern extended beyond completed mergers and acquisitions (M&A). Saudi Arabia's expanded privatisation programme opened around US$64 billion of transport, water and social infrastructure among others to private capital¹⁴. Across the half, capital favoured the operating assets, logistics and industrial base that underpin the region’s economic resilience and long-term diversification.

Figure 4: Middle East deal volumes by sector (H1-2024 to H1-2026e)

2.2 Sovereign-linked buyers keep regional deals moving 

As foreign flows thinned, the region's own capital held up the market. State and sovereign-linked entities featured on at least one side of half of the region's largest transactions, underscoring their central role as anchors of the market through a more uncertain period.  

This was visible in deal flows – where regional capital led, transactions continued to close. 

 Inbound cross-border activity fell around 19%, while intra-regional dealmaking held steady, edging up 2% and extending a multi-year shift towards regional dealmaking. Transactions completed most readily where they were structurally easiest to fund, financed within the region and less exposed to currency, counterparty and valuation risk.  

GFH Financial Group's acquisition of a 60% stake in Byrne Equipment Rental¹⁵, a US$400 million Bahrain-to-UAE transaction in a GCC industrial-services platform, captured the pattern: regional capital backing local assets in sectors tied to the real economy. 

Figure 5: Cross border deal volume (H1-2024 to H1-2026e)

2.3 Technology, Media and Telecommunications dealmaking holds firm

Technology, Media and Telecommunications (TMT) was one of the few sectors to hold its ground in the first half of 2026, extending a three-year run of consistent deal growth across different market conditions. That resilience made it one of the region’s most active sectors by volume in the first half of 2026, even as the wider market became more selective. 

Yet, completed M&A captures only part of the capital flowing into the region's digital economy. Some of the half's largest digital investments progressed through partnerships, infrastructure investment and greenfield development rather than traditional acquisitions. 

In the UAE for instance, Stargate UAE¹⁶, a one-gigawatt Abu Dhabi compute cluster, progressed through strategic partnerships and infrastructure investment rather than traditional M&A. Led by G42's Khazna, the first 200-megawatt phase is expected to come online later in 2026. In Saudi Arabia, the national AI company HUMAIN expanded its data-centre capacity through new financing and infrastructure partnerships¹⁷, while export authorisations granted in late 2025 allowed both countries to scale imports of advanced Nvidia chips¹⁸.  

Completed M&A within the TMT sector reflected small-ticket, venture-style investment into software, digital and AI-enabled businesses rather than scaled corporate acquisitions. The region’s larger compute build-out, which represents one of its biggest digital commitments, therefore sit largely outside traditional deal statistics. As some of these assets reach operational scale, they are likely to attract the kind of consolidation and strategic investment that typically follows large infrastructure build-outs. 

Should regional conditions stabilise, activity is expected to pick up in the second half, led by the sectors that carried the market through the first half. In the near term, however, the next phase of M&A is likely to be shaped less by broad-based risk appetite and more by consolidation. As seen after COVID-19, larger players with stronger balance sheets may look to acquire smaller competitors, strengthen market position and build scale while valuations remain more selective. 

Inbound capital is likely to remain more cautious until regional tensions ease. In the meantime, sovereign wealth funds, strategic buyers and well-capitalised regional players are expected to continue anchoring activity, using consolidation to support priority sectors and position the market for recovery.  

As the region’s resilience story continues, we outline six considerations expected to shape what comes next.