Mena M&A activity surges 74% in second quarter

Merger and acquisition transactions with Middle Eastern and North African involvement reached an eight-year high $33.9 billion during Q2 2018, up 74 per cent in compared to the same 2017 period.
Deals with a Middle Eastern and North African target reached an all-time high rising to $21.3 billion, up 110 per cent from the same period in 2017 while inter-Mena or domestic deals reached a five-year high, also up 232 per cent from year-on-year, data released by Thomson Reuters shows.
"Driven by Saudi British Bank acquisition of the entire share of capital of Alawwal Bank for $5 billion, Mena inbound M&A currently stands at an all-time high. On the other hand, outbound M&A decreased from $6.9 billion in Q2 2017 to $6.6 billion so far this year," Thomson Reuters said in a report.
Energy and power deals accounted for 32.8 per cent of Middle Eastern and North African involvement M&A by value, followed by the financial sector with a 30.2 per cent market share but counting with 58 transactions, 18 more than the 40 recorded in the Energy & Power industry.  
According to the report, Mena investment banking fees totalled an estimated  $472.3 million during Q2 2018, seven per cent less than the value of fees recorded during Q2 2017.
Nadim Najjar, managing director, Middle East and North Africa, Thomson Reuters, said debt capital markets underwriting fees totalled  $140.6 million, down seven per cent year-on-year and the second highest start of the year in the region since our records began in 2000. Equity capital markets fees increased 21 per cent to $56.4 million."
Mena equity and equity-related issuance totalled $3 billion during Q2 2018, a 68 per cent increase year-on-year. According to analysts, Middle East deal activity over the past few years have been very robust. Deal volumes in both 2016 and 2017 remained consistent despite a drop in deal value in 2017, with the UAE continuing as the most attractive market for inbound investment.
Baker McKenzie's Global Transactions Forecast with Oxford Economics predicted uplift in M&A activity in 2018 globally and in the Middle East. Analysts said with the apprehension of 2017 easing and the underlying strategic drivers for investment remaining steady, they expect M&A levels in the Middle East to remain healthy throughout 2018 and to peak in 2019.
The primary drivers will be private equity players who are net sellers, sector consolidation plays, and regional family businesses who continue to reconfigure their business portfolios, they said.
In 2017, the Mena region saw a decline of 57.6 per cent in deal value, despite deal count maintaining a level that was consistent with the previous year. The year saw the announcement of a total of 126 deals worth approximately $16 billion, compared to 129 deals in 2016 at a total value of $37.8 billion. 
- issacjohn@khaleejtimes.com