TransAct Middle East 2023

The rising interest in technology investments across the Middle East in 2021 was amplified in 2022, reflecting the continued worldwide appetite for digital assets and capabilities. Many players in the region continue to seek to acquire new technology and expertise to stay ahead of a fast-evolving global market, with the UAE a prime illustration of this trend. 

The restructuring of traditional, vertically integrated telecom carriers across the Middle East continued in 2022, as operators sought to monetise their digital infrastructures to fund capital expenditure and next-generation network deployments. In line with these trends, we expect to see more deals in 2023 in key future telecom areas such as cellular tower companies, fibre, Internet of Things (IoT) and data centres.  

Dealmaking in the region’s energy sector maintained momentum in 2022, as countries continued to invest for the future. Saudi Aramco closed a $15.5bn deal to sell a 49% stake in Aramco Gas Pipelines Co to a consortium led by BlackRock Inc and Hassana Investment Co., as part of Aramco’s portfolio optimisation strategy. 

Many countries in the region are also looking to increase their investment in underdeveloped markets like renewables, given the global expansion of alternative energy sources. Most GCC countries are setting ambitious national and global renewable capacity targets, as illustrated by major investments last year in worldwide greenfield solar and wind operations by Saudi Arabia’s ACWA Power and the UAE national champion MASDAR Clean Energy.  

We have also seen increased activity in the region’s hydrogen sector, led by Abu Dhabi’s TA’ZIZ, a joint venture between ADQ and ADNOC, and similar initiatives in Saudi Arabia.

The sector witnessed an increase in M&A activity in 2022 as new players sought to benefit from the Middle East’s rapidly growing consumer market. The food and beverages space was particularly active, with UAE-based Agthia’s acquisition of 60% of the snack company Abu Auf's operations in Egypt being one of many such deals. E-commerce deals have also featured strongly. Two highlights were the Abu Dhabi-based online marketplace Noon’s acquisition of Namshi, a leading Middle East online fashion platform, and the Dubai luxury retailer Chalhoub Group’s acquisition of a majority stake in Threads Styling, a digital luxury retailer and personal shopping platform.

Deal activity surged in 2022 in response to the significant demand for high-quality healthcare services. Leading regional healthcare players targeted opportunities abroad, in a bid to establish operations in markets with substantial growth potential.

In the wake of COVID-19, private and public sector investors in the Middle East are also increasing their scrutiny of potential opportunities in the pharmaceutical, life sciences and biotechnology sectors. They are deploying capital both regionally, in order to build local biotechnology hubs, and globally to own critical life-saving infrastructure and innovations. 

The Middle East continues to attract a growing number of real estate investors with a focus on development. Last year witnessed many substantial deals, fuelled by robust GDP expansion and high oil revenues. Notable transactions included Abu Dhabi developer Aldar Properties’ $1.2bn acquisition of four commercial towers in Abu Dhabi Global Market (ADGM), and Apollo Global Management Inc’s acquisition of an 11% minority stake in an Aldar subsidiary for $400 million. Meanwhile infrastructure-related M&A activity in the Middle East shows no sign of slowing down in the wake of Qatar’s $200bn World Cup expenditure. For example, 71% of respondents to PwC’s 2022 Middle East Capital Projects and Infrastructure Survey expect to increase their capital investments over the next two years, while 55% anticipate an increase in private financing of infrastructure projects

 Middle East financial services companies have matured significantly in recent years, driven by digitalisation, economic growth, and favourable government policies. The next phase is to build more globally competitive players through consolidation and transformative fintech investments. These two factors are fuelling M&A activity across the region’s financial services sector, as shown by the 2022 data. For example, Abu Dhabi’s ADQ acquired stakes in Egypt’s largest private-sector bank CIB and e-payment platform Fawry for $911.5 million and $68.6 million respectively. Meanwhile, Saudi Arabia’s PIF acquired a 25% stake in the Egyptian fintech eFinance. The proliferation of M&A deals in this sector looks set to continue, given its critical importance for social and economic transformation programmes.

The Middle East’s industrial development relies heavily on robust logistics and global trade. Against this background, companies and governments are making major investments across the value chain to acquire new technology and create scale efficiencies through consolidation, including cross-border d

The transition towards electric vehicles (EV) has also boosted deal activity in the region, with the automotive sector remaining a focal point for achieving net zero objectives. Government-backed policies aimed at incentivising EV adoption, such as exemptions from certain registration fees and a wider network of charging stations, have attracted foreign investments. 

Looking ahead, industrial manufacturers in the region may consider acquiring autonomous vehicle capabilities, if driverless vehicles take off. We may also witness the proliferation of the use of recycled raw materials as sustainable construction and manufacturing practices become increasingly widespread throughout the Middle East.  In this context, the 60% stake acquisition of Saudi Daz Waste Recycling Factory by Saudi Arabia’s PIF-owned Saudi Investment Recycling Co. is just one of many such transactions driving the sector’s further consolidation.