Telecoms, media and technology to lead Middle East acquisitions in 2016

Telecoms, media and technology deals are expected to lead Middle Eastern merger and acquisition activity this year, with a potential 27 transactions in the pipeline, according to Mergermarket.

The intelligence firm also forecast 15 deals in the energy, mining and utilities sector and 10 in financial services and pharmaceuticals, medical and biotech respectively, but expected less activity in construction and real estate.

“The UAE is likely to be the hottest regional market for TMT deals, with media houses and software development companies the most likely to be sold,” the company said.

“The heat chart also shows that, in spite of low levels of Energy sector M&A in the region this year, there are a number of potential assets in the market that could drive more deals in 2016, albeit at low valuations.”

In its Middle East heat chart, the company projected nine deals respectively in the consumer, industrials and chemicals and business services sectors.

Six deals were expected in transportation with only four and one expected in construction and real estate respectively.

Mergermarket global research editor Kirsty Wilson said the UAE would lead the region in terms of TMT activity in 2016, following the $292m acquisition of e-commerce platform Souq.com in Q1 by Standard Chartered Private Equity limited, Baillie Gifford and International Finance Corporation.

A study by consultancy firm EY launched yesterday revealed that 37 per cent of MENA executives expect to actively pursue acquisitions over the next 12 months.

Read: Middle East merger activity to continue despite low oil prices – EY

Almost half (49 per cent) of regional executives participating in the company’s Capital Confidence Barometre said they had five or more deals in the pipeline, compared to a global average of 20 per cent.

The company said low oil prices were having little impact on M&A strategy in the region but 47 per cent of executives expected distressed asset sales to become more common in deal making.

In a further report, Law firm Baker & McKenzie said the UAE, Saudi Arabia and Kuwait had been the busiest countries for cross-border transactions in the region.

Speaking at a press event in Dubai earlier today, Baker & McKenzie head of UAE corporate practice Borys Dackiw said the Saudi Arabian retail sector was looking particularly promising.

Changes in ownership restrictions for foreign companies in the country mean many were now eyeing joint ventures with their distribution partners. “Retailers want more control and visibility of distribution,” he said.