TransAct Middle East 2023

Gulf exceptionalism creates M&A opportunities despite global headwinds

M&A activity often slows down in uncertain or volatile market conditions. Overall, 2022 saw a notable slowdown in global M&A deal activity, as the triple headwinds of soaring inflation, rising interest rates and looming recessionary fears created a bearish outlook and heightened caution among investors. 

However, the Middle East proved a remarkable exception to this general pattern, as favourable regional dynamics such as elevated oil prices and increased fiscal discipline contributed to greater economic flexibility and relatively high growth. This “Gulf exceptionalism” allowed M&A activity to maintain an upward trajectory across the region in 2022, with a series of substantial $1bn-plus transactions taking place in different industries. 

By the end of 2022 a total of 632 M&A deals had been recorded in the Middle East. This figure represents only a marginal year-on-year increase of 1.3% in deal count but is still more than double the equivalent total in 2019. Private equity (PE) investors and sovereign wealth funds (SWFs) were the main drivers of deal activity, which was further strengthened by historically high oil prices and revenues and improved liquidity on the back of fiscal reforms.

The region’s growing resilience and attractiveness for foreign direct investment, IPOs and cross-border M&A activity have been reinforced by intensified efforts across the Middle East to diversify away from dependence on oil and gas and into areas such as manufacturing, services and technology. In addition, governments are increasingly focused on socio-economic integration and business-friendly policies, enhancing the region’s appeal to investors. 

“The Middle East is certainly not immune to the economic headwinds affecting M&A in the US and Europe, but at the start of 2023, the mood here is more optimistic than most global markets. In its favour, the region has financial resources available for deals, which is supporting outbound and cross-border transactions. There is also enormous potential around the energy transition, and a strong focus on tech and digital acquisitions as transformation programmes continue across the region.”

Romil Radia




Romil Radia
Deals Markets Leader, PwC Middle East

2023 M&A Themes

Deep resources for M&A investments

Cross-border M&A continues, building up national and regional champions

Higher interest rate environment should stimulate increased focus on value creation

The energy transition is creating new M&A opportunities

Strong focus on technology and digital infrastructure

Country Highlights

Most Middle East M&A activity in 2022 was concentrated in the UAE, Saudi Arabia and Egypt, which collectively recorded 563 deals, or 89% of the region’s total deal volume . 

The UAE and Saudi Arabia witnessed the fastest year-on-year increase in deals, although still at lower levels than in 2021, with volumes rising respectively by 9% and 6%. In the UAE, deal activity mainly focused on consumer markets, technology, industrials and financial services, supporting the country’s drive to diversify away from oil and gas. 

Saudi Arabia’s SWF, the Public Investment Fund (PIF), recorded a series of substantial deals in 2022. They included its $1.5bn acquisition of a 17% stake in Saudi Arabia’s Kingdom Holding Co; a $150 million acquisition through its Egyptian affiliate of a 34% stake in Egypt’s B.Tech consumer electronics company; and a $250 million acquisition of 30% of the district cooling provider Saudi Tabreed, a subsidiary of the UAE-listed National Central Cooling Co.

In Egypt, the momentum observed last year maintained its pace, with a modest 2.2% increase in deal volume compared with 2021. Government initiatives such as the granting of a special licence to foreign investors continue to spur investor interest, with deals spanning the healthcare, real estate, financial services, industrial and consumer services sectors.

Capital Markets and IPOs

Despite the market turmoil and the worldwide slump in IPO activity, deal opportunities in the Middle East displayed resilience in 2022, due to strong interest in the region and available liquidity.

Listing activity gained traction, as key economies such as Saudi Arabia* and the UAE pursued their strategic agenda of increasing capital market activity and attracting foreign investment. The top IPO deals in the region were driven by the technology, energy, food processing, healthcare and education sectors. Saudi Arabia’s* thriving IPO market witnessed a particularly strong surge in listings in 2022, with 41 primary listings compared with 12 in 2021. They included Saudi Aramco Base Oil Co.’s $1.3bn IPO, which was oversubscribed 29.5 times. Dubai’s main power and water company, DEWA, raised $6.1bn in an IPO, the region’s largest listing since Saudi Aramco’s 2019 blockbuster. Investors’ heightened interest reflected widespread confidence in the region’s ability to deliver transformation programmes and build long-term economic growth.

Sector highlights

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Largest Middle East Transactions in 2022

  • $15.5bn

    Saudi Aramco’s sale of a 49% stake in its Aramco Gas Pipelines Co to a consortium led by BlackRock Inc. and Hassana Investment Co.

    February 2022

  • $8.5bn

    Ahli United Bank’s transfer of a 24.3% stake to Kuwait Finance House.

    October 2022

  • $5bn

    DP World and Caisse de dépôt et placement du Québec’s investment in three of DP World’s flagship UAE assets.

    June 2022

  • $2.4bn

    DP World’s sale of a 10.2% stake in Jebel Ali Port, Jebel Ali Free Zone and National Industries Park to Saudi Arabia’s Hassana Investment Co.

    December 2022

  • $2.3bn

    NMC Healthcare’s sale of a 53% stake to creditors in a final international asset restructuring sale.

    March 2022

The 2023 Outlook

It is already clear that 2023 could be another year full of opportunities for M&A in the Middle East, with transformation and transactions at the forefront of CEOs’ value creation strategies. Much depends on whether the GCC can escape the worst impact of the global slowdown, enabling SWFs and other Middle East investors to use their competitive advantage to invest in the US and Europe and help drive the region’s transformation. They have more than enough dry powder to deploy, with the International Monetary Fund (IMF) estimating that oil-producing Middle Eastern countries could earn an additional $1.3tn in oil revenues over the next four years.

Based on our research and engagement with clients, we believe this regional confidence is justified. For a start, the Middle East currently benefits from deep resources for M&A investments. The region’s SWFs have an abundance of dry powder, due principally to high oil prices, which gives them a competitive edge over international counterparts which are suffering from the global market downturn and investor redemptions.

At the same time, the Middle East’s transformation story, powered by new technologies, is increasingly compelling for regional and global dealmakers. This is shown by the strong focus on technology and digital infrastructure across the Middle East’s M&A landscape in all sectors. 

The Middle East’s drive to wean itself off oil and gas revenues and build more diversified “knowledge economies” is at the heart of this transformation story. So, too, is the other side of this story – the region’s critical role in global efforts to mitigate climate change, which in turn is generating unprecedented energy transition dealmaking opportunities. Last year’s COP 27 summit in Egypt and the forthcoming COP 28 summit in Dubai in December 2023 form the backdrop to a fertile “green” M&A landscape where the ambitious net zero pledges made by GCC governments will ensure rich opportunities for dealmakers over the coming years in areas such as solar power, recycling, and energy storage. Some of these trends are already starting to emerge.

Nonetheless, current market conditions in early 2023 suggest that the Middle East is a rare global sweet spot for M&A, provided companies have well-thought-out strategies and the financial resources to make transformational deals. They need to be bold, but in uncertain times, thorough research before committing to a deal has never been more important.

Contact us

Romil  Radia

Romil Radia

Deals Markets Leader, PwC Middle East

Antoine  Abou-Mansour

Antoine Abou-Mansour

Deals Leader, PwC Middle East

Imad Matar

Imad Matar

Transaction Services Leader, PwC Middle East

Tel: +966 (11) 211 0400 (ext 1501)

Zubin Chiba

Zubin Chiba

Corporate Finance Leader, PwC Middle East

Tel: +971 (0) 50 298 3765

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