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The mergers and acquisitions (M&A) activity in the Middle East and North Africa (MENA) region, which rallied 66 percent last year, is likely to remain robust in 2022, a new report by consultancy firm EY said.
The resurgence was primarily driven by domestic or intra-regional deals, which increased to 366 in 2021, compared to 192 deals in 2020, the MENA M&A Insights report said.
The report also showed that the total announced M&A deal value increased by 16 percent in 2021 to $99 billion from $85.2 billion in 2020. The top 10 deals in 2021 aggregated to $58.8 billion, representing 59 percent of the total deal value.
Brad Watson, EY MENA Strategy and Transactions Leader, said the resurgence was a result of improving post-COVID-19 market conditions.
“The recovery in oil and gas prices and an improving public health backdrop have also helped to lift the economic outlook in the region, leading to renewed confidence in regional boardrooms,” he said.
Government-related entities (GRE), including sovereign wealth funds and national oil companies, were pivotal players in the region’s M&A market in 2021, contributing a combined deal value of $62.6 billion, or 63 percent of the total.
There was also an upturn in private equity (PE) participation in MENA deals, with PE executing 165 deals in 2021, compared to 73 deals in 2020. PE will continue to be net sellers in 2022, but with imminent fund raising in sight, buy-side PE activity is expected to increase in the future.
Anil Menon, Head of MENA M&A and ECM, EY, pointed out that the year was also remarkable for the fact that much of the deal making took place virtually.
“Furthermore, what makes 2021 remarkable is that the activity levels have been
consistently good across sectors and geographies. We expect continued confidence and momentum in 2022.”
Strategic M&A also had a good year, with interesting deals such as the acquisition of nuts and spices company Bayara by Savola, as well as multiple acquisitions by Agthia in the confectionary and poultry space.
UAE topped the charts in terms of volume at 303 deals, while Saudi Arabia attracted the most M&A capital at $47.4 billion. Egypt also saw robust deal activity in 2021, with 118 deals worth $7.7 billion.
(Reporting by Brinda Darasha; editing by Cleofe Maceda)
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