Saudi Arabia and UAE dominate MENA M&A deals in 2024, accounting for over 80% of regional deal value

Saudi Arabia and the UAE are leading a significant surge in MENA M&A deals in 2024, with the total deal value reaching an impressive $71 billion in the first nine months of the year, according to a recent EY report. This represents a 7% year-on-year increase, highlighting the region’s rising appeal to global investors.

The latest MENA M&A Insights 9M 2024 report by EY highlights that the region saw a total of 522 transactions during this period, with the volume of deals increasing by 9%. The surge was driven primarily by robust cross-border activities and strategic investments led by the region’s powerful sovereign wealth funds, including Saudi Arabia’s Public Investment Fund (PIF) the UAE’s Abu Dhabi Investment Authority (ADIA) and Mubadala.

Brad Watson, EY MENA’s strategy and transactions leader, attributes this uptick to policy reforms and favourable business conditions. He noted, “The MENA region’s deal activity has seen a significant boost this year, largely due to strategic policy shifts, the liberalisation of investment regulations, and capital inflows from international and regional investors.”

Saudi Arabia and the UAE emerged as the top destinations for investment, commanding an impressive 81% of the region’s total deal value and 52% of the deal volume. Collectively, the two nations registered 239 deals worth $24.5 billion. Analysts point to their business-friendly environments, stable economies, and strategic economic policies as critical factors attracting both regional and foreign investors.

In particular, the UAE continues to shine as a hotspot for investment, benefiting from its streamlined regulatory environment and proactive economic strategies. Watson elaborated, “The UAE’s efficiency in legislative reforms has made it a preferred destination for global firms looking to expand into the MENA region.”

A significant driver of this M&A boom has been the proactive involvement of sovereign wealth funds, which have played a pivotal role in supporting national economic diversification strategies. These funds are especially focused on sectors aligned with long-term economic goals, such as technology, renewable energy, and infrastructure. Cross-border M&A deals dominated the scene, making up 52% of the total volume and a remarkable 73% of the overall deal value.

While cross-border transactions stole the spotlight, domestic M&A activity also saw a strong surge. Government-related entities were particularly active, pushing domestic deal values up by 44% to $19.3 billion. Key acquisitions in the oil and gas, metals, mining, and chemicals sectors drove much of this growth, indicating a focus on consolidating resources and expanding capacities within the region.

Insurance, along with the oil and gas sectors, proved to be the most lucrative areas, accounting for 34% of the total deal value in MENA. In terms of volume, however, technology and consumer products led the pack, with 78 deals comprising 31% of the region’s M&A activities. These sectors align with the broader regional goal of transitioning towards a knowledge-based, digital economy.

One of the standout domestic transactions was Saudi energy giant Aramco’s acquisition of a 22.5% stake in Rabigh Refining and Petrochemical Co. from Sumitomo Chemical, valued at $8.9 billion. This deal was the largest domestic transaction recorded in the region this year, showcasing Saudi Arabia’s focus on strengthening its petrochemical industry and expanding its downstream capabilities.

The US emerged as a major partner in outbound investments from the MENA region, with deals valued at $18.3 billion across 32 transactions. Strategic collaborations facilitated by entities like the US-UAE Business Council have bolstered these investments, with American firms increasingly partnering with UAE public and private sectors to leverage opportunities in technology, professional services, and infrastructure.

Outbound M&A activity dominated the landscape, accounting for the bulk of the deal value with 147 transactions worth $41.4 billion. Investments were particularly strong in the insurance and real estate sectors, with the US and China receiving 70% of outbound deal value from the region. This trend reflects a concerted effort by Gulf nations to diversify their investment portfolios globally.

On the other hand, inbound investments into the MENA region also recorded solid growth. Inbound deals increased by 20% in volume and 47% in value, totalling $10.4 billion. The US and UK were the top contributors, especially in the technology and professional services sectors, further solidifying the region’s appeal to global investors looking to tap into emerging markets.

The EY report underscores that strategic reforms, economic liberalisation, and capital deployment from sovereign wealth funds have placed Saudi Arabia and the UAE at the forefront of the MENA region’s economic resurgence. As regional powerhouses, these nations are not only diversifying their economies but also paving the way for sustained growth through robust investment frameworks.

Saudi Arabia, in particular, is leveraging its Vision 2030 goals to drive growth across sectors, while the UAE continues to implement policies that attract international businesses. These countries are well-positioned to maintain their leadership in the MENA M&A landscape, with both domestic and cross-border investments showing no signs of slowing down.

As the Gulf continues to prioritise diversification and sustainability, the region’s M&A market is expected to remain vibrant, drawing in investors looking to capitalise on emerging opportunities across various industries. With strategic investments pouring into technology, infrastructure, and renewable energy, Saudi Arabia and the UAE are poised to lead the charge in shaping the economic future of the MENA region.