19 November 2016

Telecoms, Media & Technology (TMT) is likely to be the leading sector for mergers and acquisitions (M&A) in 2017, according to Mergermarket, the leading provider of M&A Intelligence.  Mergermarket’s updated GCC Heat Chart, the TMT sector could see the strongest levels of M&A activity in 2017, with 17 companies currently up for sale or likely to come onto the market.

The UAE is likely to see the most activity in this sector, with 11 deals reported to be in the pipeline. The data was announced at Mergermarket’s Saudi Arabia M&A and Capital Markets Forum, hosted in partnership with EY, Baker & McKenzie and Instinctif Partners.  The year 2016 saw a dip in deal-making in the traditionally strong Energy, Mining and Utilities sector, with the sector’s share of the M&A market falling from 60.1 percent to just 5.4 percent ($4.7bn to $1.4bn).However, Mergermarket’s Heat Chart for 2017 has identified at least nine deals in the M&A pipeline, which could indicate a resurgence for the sector.

Ruth McKee Al Ghamdi, Head of MENA at Mergermarket, commented: “There has been an uptick in deal making interest in the technology sector in the past year with disruptive and new digital technologies transforming industries across many sectors. We see this trend continuing with a healthy number of deals in the pipeline and a number of regional tech companies now reaching Series A, B and C fundraising stages.  The healthcare sector is continuing to prove resilient and a number of deals are expected to close in the coming few months, although high valuations in this space continue to be an issue for investors.”

For the coming months Financial Services is set to remain at the top of the industry rankings by value due to this year’s acquisition of First Gulf Bank (FGB) by National Bank of Abu Dhabi (NBAD) for $14.8bn. The mega-deal accounted for 55.6 percnet of the Middle East’s total deal value for 2016, with a further seven Financial Services deals in the pipeline. There are indications that the sector may end the year in an even stronger position than the record heights it hit in 2015.

Industries that are experiencing the lowest levels of activity include the Real Estate and Construction sectors, in which only two potential deals are anticipated.

Moderate activity has been reported in the Business Services and Leisure sectors, with six and five anticipated deals respectively.  

Credit Suisse and UBS have been catapulted to the top of Mergermarket’s GCC advisory league tables.

Both banks were placed outside the top 10 at the same point last year, but as a result of their advice to First Gulf Bank and National Bank of Abu Dhabi they now sit above Citi, Lazard and Goldman Sachs in the 2016 rankings by deal value.

Meanwhile,  in a seperate report EY noted Mena M&A activity and value declined in Q3 2016, recording 74 deals amounting to $5b, compared to 98 deals amounting to $6b in Q3 2015.

A according to EY’s Q3 2016 M&A report. The GCC dominated deals in the third quarter, representing 92 percent of total deal value and 77 percnet of total deal activity.

Deal activity in Q3 decreased across all transaction types;inbound deal activity decreased by 42 percent, outbound deals decreased by 24 percent and domestic deals decreased by 10% compared to Q3 2015.

The UAE was the most attractive destination for M&As in region, leading as the top target country by deal value at $17.1m for 14 deals.

 The country witnessed the largest deal in Q3 with the acquisition of Media.net Advertising Ltd by Investor Group from China for $900m.

In terms of sectors, media and entertainment, real estate and airlines were the top three target sectors by deal value in Q3 2016.

© The Peninsula 2016