M&A Accounting Trends in the UAE

Sovereign wealth funds continued to lead the deal activity in the region. The UAE registered the region’s largest M&A with the announced accounting trend acquisition of Univar Solutions by Apollo Global Management and ADIA for US$8.2b. Canada was the largest acquiring country outside the region by volume while France marked the highest number of inbound MENA deals

According to the accounting firms in the UAE. Current UAE M&E accounting trends in the first half of 2023. The MENA region witnessed a total of 318 mergers and acquisition (M&A) deals amounting to almost 44 billion US dollars. The GCC region accounted for the majority of deals – 254, valued at US$42.5b. Compared with H1 2022, deal volume during this period was down by 14%, while deal value saw a slight increase of 0.4%. Current UAE M&E accounting trends show an increase

The M&A market in the first six months of the year was consistent with the trends observed in the second half of 2022. While deals continued notwithstanding the dampened economic outlook, high interest rate, recession fears, inflationary environment, and geopolitical tensions, deal-makers seemed to be adopting a cautious approach given the uncertain market conditions. This is a major result of the facts resulting from the Dubai merger financial analysis. 

Governments are big investors is a major current UAE M&E accounting trend

Sovereign wealth funds (SWFs), such as Abu Dhabi Investment Authority (ADIA) and Mubadala from the United Arab Emirates (UAE) and the Public Investment Fund (PIF) from the Kingdom of Saudi Arabia (KSA), continued to lead the deal activity in the region to support their countries’ economic strategies. This was shown in Dubai’s merger financial analysis and the wider Gulf region as well. 

International investments and current UAE M&E accounting trend

Cross-border deals accounted for 57% and 85% of the total deal volume and value respectively, becoming more popular among growth-focused companies. Outbound deals represented 32% of the total M&A deal volume and 70% of the value.

Deals involving government-related entities (GREs) amounted to a total value of US$29.9b, accounting trend for 68% of the total disclosed deal value and 19% of the deal volume. Meanwhile, transactions involving private equity (PE) or SWFs constituted around 23% and 53% of the total deal volume and value respectively.

In terms of sectors, technology contributed US$15b to the total deal volume, followed by chemicals with US$11.9b and, offset by a wide gap, provider care with US$3.3b.

UAE M&E accounting trend shows it leads in the Gulf

The UAE dominated the lists of target countries as well as bidder countries by value last year. They are followed by KSA and Kuwait in both rankings. Egypt and Oman also made it among the top five bidder countries. While Bahrain and Qatar made an appearance among the top five target countries by value.

As before, Canada was the largest acquiring country outside the region by volume with transactions worth a total of US$2.6b. However, France marked the highest number of inbound MENA deals with 13 in H1 2023.

Brad Watson, accounting firms in the UAE MENA Strategy and Transactions Leader, says:

“Inflation has fallen in most economies in recent months due to the downturn in energy prices. even though food and service prices have continued to rise rapidly. Dealmaking got off to a slow start in 2023. with rising interest rates, persistent inflation, and economic uncertainty weighing heavily on M&A activity. Despite the marked drops witnessed across the board, the UAE remained the favored investment destination in the first half of the year. This was driven by government reforms that continue to attract investment into the country.”

Some major M&As concentrated in UAE and Saudi Arabia

Ten of the region’s largest M&As were concentrated in the UAE and Saudi Arabia. In March 2023, US asset management firm Apollo Global Management and ADIA announced their plan to acquire UAE-based Univar Solutions for US$8.2b. Also, in the same month, Blackstone along with ADIA signed a definitive agreement to acquire the UAE’s Cvent Holding for US$4.7b. In April 2023, PIF-owned Savvy Games Group announced its plan to buy a 100% stake in the US mobile games developer Scopely, Inc. for US$4.9b.

Domestic deals on the decline

Domestic M&A activity dropped by 24% in H1 2023 with 138 deals, compared with 181 deals over the same period in 2022. The disclosed deal value experienced a sharp dip of 53%, amounting to US$6.7b, compared with US$14.2b in H1 2022.

The technology sector witnessed the highest transaction activity in the domestic market. With 33 deals by volume and US$880m by disclosed value. This is compared with 55 deals by volume and US$584M by disclosed value over the same period last year. However, the largest domestic deal in H1 2023 – PIF’s acquisition of Nesma & Partners Construction for US$1.3b – took place in the real estate sector.

Rising oil prices impact inbound deals

H1 2023 recorded a drop in inbound deals – 77 by volume and US$6.5b by disclosed value versus 94 deals worth US$9.8b in H1 2022, representing an 18% dip in terms of volume and a 34% decrease in terms of value.

Energy companies and current UAE M&A accounting trends

The three oil and gas inbound deals completed during this period show that the rising oil prices in 2022 had a significant impact on this year’s activity. Only one of these deals had a disclosed value of US$1.6b. This contributed to 97% of the disclosed inbound deal value.

Anil Menon, accounting firms in the UAE MENA Head of M&A and Equity Capital Markets Leader, says:

“In line with historical trends, the technology sector witnessed the highest inbound and domestic deal activity in H1 2023. During this period, we saw a tremendous increase in deal value, contributed by two large deals. Investor interest focused mainly on cybersecurity, cloud computing, fintech and ecommerce, clearly indicating the segments that are poised to shape the future of the industry.”

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What Dubai merger financial analysis shows about M&E

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