Monday, Aug 29, 2016

Dubai: The UAE, Saudi Arabia and Egypt were the top three markets in terms of deal activity in the first half of 2016, according to EY.

Despite sluggish macroeconomic situation at the beginning of 2016, overall deal activity in the first half of 2016 was largely consistent with the same period last year, the global consultancy said in an emailed statement on Monday.

Announced deal value in the Middle East and North Africa (Mena) region decreased by 10 per cent to $19.7 billion in the first half of this year, compared to $21.9 billion in the same period last year, as per EY estimates.

Technology [sector], with deals valued at $4.4 billion, real estate deals at $4.2 billion and consumer products at $3.7 billion, were the top three sectors by deal value in the first half of the year.

“With modest recovery in the macroeconomic situation, the outlook for M&A (mergers and acquisitions) in the second half 2016 remains cautiously optimistic, and the deal activity on a full year basis in 2016 is expected to mirror the performance in 2015,” Phil Gandier, Mena Transaction Advisory Services Leader, EY, said in a statement.

In the first half of 2016, both from a deal activity and value perspective, significant portion of technology and real estate deals were outbound. In line with the trend noticed in the first half of 2015, acquisition capital allocation to outbound transactions in first half of 2016 was at 52 per cent of total deal value. Europe and the US continued to be the top two destinations for outbound transactions.

Domestic M & As had a positive performance in the first half of 2016, recording an increase in value of 67 per cent in the first half of 2016 compared to the same period last year. During this period, consumer products, industrial products, real estate, banking & capital markets witnessed significant deal activity.

“Improving business sentiment and investor confidence is expected to see an uptick in domestic M&A activity during H2 [second half] 2016 especially in consumption led sectors in key markets such as Saudi Arabia and the UAE,” stated Anil Menon, EY’s Mena M&A and Equity Capital Markets Leader.

Mergers and acquisitions in the UAE witnessed a new turn with that of First Gulf Bank’s (FGB) with the National Bank of Abu Dhabi (NBAD), and Mubadala’s with International Petroleum Investment Company (Ipic).

A merger between NBAD and FGB would create a bank with assets worth around Dh627 billion or $171 billion, while the Mubadala Development Company and the Ipic merger would create a $135 billion entity.

Staff Report

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