Why the GCC is emerging as a hub for global cross-border deals

The GCC has traditionally been a hub for trade – thanks to its central location as well as strong ports which were developed as a key economic driver in the past.

As globalisation has accelerated worldwide, countries like the UAE have further established themselves as major players in the international logistics supply chain by creating favourable policies and promoting open trade. This has led to more cross-border deals, even during the Covid-19 pandemic.

“Our M&A (mergers and acquisitions) outlook for the GCC is very positive,” says Joshua Jahani, managing director of investment firm Jahani and Associates (J&A).

“We have seen an increase in cross-border M&A among the GCC countries, North America and Southeast Asia. Since the pandemic has shaped and will continue to shape markets worldwide, we expect to see sustained activity in ‘pandemic-resilient’ industries such as e-commerce, agtech, and technology in general.”

According to research by J&A, 121 cross-border deals worth $28.93bn were announced between US-based investors and MENA-based companies in 2020.

While venture capital firms accounted for 84 per cent of the total number of deals, 10 strategic acquisitions were conducted with a median of value of $1.03bn through large deals with oil and gas companies and mobile technology.

The most significant deals from a value perspective were conducted by the Abu Dhabi National Oil Company (ADNOC) for a total of $20.2bn across two rounds in Q3 2020.

According to J&A, US-based venture capital and private equity groups invest in a wide range of MENA-based companies with a particular focus on software and automotive deals. Strategic acquisitions are industry-specific and designed to grant large corporates in the US access to MENA markets.

“We have several buy-side mandates now that are seeking acquisitions in the GCC to create a launching pad to the rest of the world,” says Jahani.

“MENA businesses possess a unique strategic advantage from their central global location alone. They are connected to every part of the world,” he adds.

With the GCC – specifically the UAE and Saudi Arabia – now focused on economic diversification away from oil with a focus on technology and innovation, the region is set to grow in stature as a well-established hub that can connect the growing economies of Africa and South East Asia with more stabilised regions such as North America and Europe.

For more details, click here: https://jahaniandassociates.com/global-trade-analysis-mena-uae-and-ksa/