Mergers and acquisition (M&A) activity in the Middle East and North Africa witnessed a major surge in 2021, registering an increase of 66 percent compared to 2020.
According to the EY MENA M&A Insights report, the record M&A levels were primarily driven by domestic deals which increased to 366 in 2021, compared to 192 deals in 2020.
The report also showed that announced total M&A deal value increased by 16 percent to $99 billion from $85.2 billion in 2020 while the top 10 deals by value in 2021 aggregated to $58.8 billion, 59 percent of total announced deal value.
Brad Watson, EY MENA strategy and transactions leader, said: “In 2021, we saw a tremendous surge in MENA M&A activity as 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.”
Government-related entities (GRE) including sovereign wealth funds and national oil companies were pivotal players in the MENA M&A market in 2021, contributing to a total deal value of $62.6 billion, or 63 percent of total disclosed deal value of $99 billion.
There was also an upturn in private equity (PE) participation in MENA deals, with PE executing 165 deals in 2021, as opposed to 73 deals in 2020.
EY said 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.
According to the report, the UAE experienced the highest deal activity in terms of volume (303 deals) while Saudi Arabia attracted the most M&A capital ($47.4 billion).
Anil Menon, head of MENA M&A and ECM, EY, said: “MENA M&A activity in 2021 was unprecedented not just by sheer volume, but also because much of the deal making was conducted 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.”
The region saw significant M&A activity within the energy, resources, and chemicals sectors in 2021, with several multi-billion-dollar deals being signed in Saudi Arabia.
The oil and gas sector witnessed the highest deal activity in terms of deal values, largely driven by a stake sale by Aramco in its natural gas pipeline business.
The technology sector witnessed the highest deal activity in terms of deal volumes in 2021 and out of 43 inbound technology deals in the region, 20 were targets in the UAE.
Looking ahead, EY said MENA M&A activity in 2022 is expected to remain robust. Key deal themes include Continued GRE investment, digitization and technology, and portfolio optimisation.
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