Qatar and UAE top 2012 Mena activity in region

By Santhosh V Perumal/Business Reporter

Qatar and the UAE topped in mergers and acquisitions in the region last year, according to Ernst and Young (E&Y).

From an acquirer’s perspective, countries that ranked highest in terms of announced deal value in 2012 were the UAE at $13.5bn, followed by Qatar at $11.2bn and Kuwait with $3.9bn.

Of the top 10 announced deals by value in Mena (Middle East and North Africa) in 2012, four of the deals were acquired by Qatar and three of the deals were acquired by the UAE.

The countries that saw the largest number of announced acquisitions in 2012 were the UAE (77 deals), Qatar (48 deals), and Saudi Arabia (33 deals).

The deal values in the region rose from $31.6bn in 2011 to $44.8bn in 2012, an increase of 42%.  Deal volume on the other hand fell 4%, from 416 in 2011 to 398 in 2012.

“The 42% increase in announced deal values in 2012 suggest that there may be an improvement in the valuation gap amongst buyer and sellers in the market in comparison to  last year where total deal values were considerably lower,” said Phil Gandier, Mena head of transaction advisory services, E&Y.

The fourth quarter (Q4) saw “significantly” higher deal values yet lower deal activity in 2012 compared to the same period in 2011.

Announced deal values increased by 84% from $7.2bn in Q4 2011 to $13.3bn in Q4 2012. Deal volumes in Q4 2012 declined by 17% to 107 deals from 129 deals in Q4 2011.

In comparison to the previous quarter, total announced deal values rose from $9.9bn in Q3 2012 to $13.3bn in Q4 2012, a jump of 35%.

“As 2013 unfolds there is an anticipation that the improvement in deal activity in 2012 will further improve as we start to see market conditions continually improving despite the unpredictable macroeconomic landscape,” Gandier said.

In terms of announced outbound deals in 2012, the real estate sector led in activity with 21 deals followed by consumer products with 13 deals. The oil & gas sector was highest in terms of the value of announced outbound deals at $5.7bn followed by the professional firms & services sector at $3.4bn.

Of the 398 deals announced in the Mena region in 2012, E&Y said 71 deals were in the SWF/PE (sovereign wealth fund/ private equity) space, an increase of 54% from the 46 deals in 2011.

The 71 deals comprised $13.3bn of the total announced deal values in 2012. March alone saw the most activity in 2012 with 14 deals. Most of the SWF/PE deal activity was in the realty sector however the highest SWF/PE deal values were in the oil & gas sector.

The significant increase in SWF/ PE activity has boosted the regional markets through the increasing number of transactions taking place, according to Gandier.

Finding that much of the wealth in the region is held by SWFs - which are some of the biggest in the world; he said their rising activity reflects the growing confidence in the regional markets.

“We expect this to push the momentum of deal activity and encourage regional investors to firm up their M&A plans. The year ahead looks more positive for the regional M&A market,” he added.