Merger and acquisition (M&A) activity gained pace in the MENA region in the first six months of 2024, with the UAE and Saudi Arabia emerging as the preferred destinations for investors, EY said in a new report.

The two Gulf nations, the UAE and Saudi Arabia, saw a combined 152 deals worth $9.8 billion and were among the top MENA bidder countries in terms of deal volume and value.

Sovereign wealth funds, such as Abu Dhabi Investment Authority (ADIA) and Mubadala from the UAE and the Public Investment Fund (PIF) from Saudi Arabia, continued to lead the regional deal activity in boosting their respective countries’ economic plans.

 The UAE was among the favoured investment destinations due to its business-friendly regulations and efficient legislative framework, said EY MENA Strategy and Transactions Leader Brad Watson.

Meanwhile, MENA countries continued to strengthen regional relationships with Asian and European countries, alongside existing ties with the US, which allowed them access to larger and growing markets, he added.

Cross-border deals rise

During the first six months, cross-border M&As contributed 52% of the overall volume and 87% of the value, which rose 15% year-on-year (YoY). Meanwhile, domestic M&A activity accounted for 48% of the total deals.

The US remained the preferred target destination for MENA outbound investors, with 19 deals amounting to $16.6 billion.

Ten of the MENA region’s highest-valued M&As in the first six months of 2024 were concentrated in the GCC region. 

The largest transaction took place in February, when Clayton Dubilier & Rice, Stone Point Capital and Mubadala Investment announced their acquisition of Truist Insurance Holdings for $12.4 billion. 

In March, PAG, Mubadala and ADIA invested $8.3 billion in a 60% stake in the Chinese shopping mall company Zhuhai Wanda Commercial Management Group. 

In June, Abu Dhabi Future Energy Company (Masdar) agreed to acquire a 67% stake in the Greek company Terna Energy for $2.9 billion.

Insurance and real estate were the most attractive sectors for investors, accounting for 47% of the total deal value. 

Saudi Arabia led in the lists of target countries as well as bidder countries, with the UAE, Morocco, Bahrain and Egypt featured in both rankings as well.

In the first half of 2024, 155 domestic deals were completed, with a combined disclosed value of $6.4 billion, up 13% YoY. 

GCC players were involved in 85% of the deals, pointing to a high level of intra-regional M&A activity. There were 94 deals within and between the UAE and Saudi Arabia, accounting for 61% of the overall domestic M&A deal volume.

Overall, the MENA region witnessed a slight increase in M&A activity, with 321 deals worth $49.2 billion. 

Deal volume grew 1% YoY, while deal value rose 12% YoY.

(Editing by Seban Scaria seban.scaria@lseg.com)