This first appeared in The Peninsula
Following a period of significant mergers and acquisitions (M&A) activity leading up to the FIFA World Cup - during which Qatar made substantial investments to enhance infrastructure and services - the country's M&A market experienced a slowdown in 2023. This deceleration was influenced by rising interest rates, a strategic recalibration after the World Cup, and shifting geopolitical dynamics. However, early 2024 has witnessed a resurgence in M&A activity, strengthened by the country’s third National Development Strategy (NDS-3).
The M&A landscape in H1-2024 reflects Qatar’s strong economic outlook as the country transitions from a hydrocarbon-based economy to a diversified, knowledge-driven one. Notable deals include Gulf Drilling International’s $338 million acquisition of Seadrill Ltd. In line with the growing demand for clean energy and reducing reliance on fossil fuels, energy companies and private equity firms are increasingly targeting acquisitions in the renewable energy space. In real estate, transactions worth QR8.16 billion highlight the country’s growing appeal for investors, while investments in infrastructure, digital technologies, and entrepreneurship demonstrate Qatar’s economic resilience.
Below are some of the key drivers that are expected to drive M&A activity within Qatar in the coming months:
1: Robust outbound investments
Despite slower growth in domestic M&A activity, outbound investments from Qatar have remained robust. The transport and logistics sector has been particularly active, exemplified by QTerminals' acquisition of the Kramer Group in the Netherlands. Additionally, Qatar Airways’ recent acquisition of a 25% stake in Airlink - a South African carrier and a 25% stake in Virgin Airlines Australia (subject to approval from regulators), reinforces its strategic position in Africa and highlights the ongoing trend of strategic international investments. These outbound deals are expected to remain key drivers for M&A activity, especially given the substantial resources of governmental and quasi-governmental entities. The ongoing North Field Expansion and the resulting increase in gas production and export is also expected to enhance the government’s budgetary surplus, further fuelling investment capabilities moving forward. Outbound M&A activity remains steady in the Middle East, with regional key market players actively pursuing international investments to establish a global presence across various sectors.
2: Record listings on Qatar Stock Exchange
In 2023, the Qatar Stock Exchange saw a record number of listings, with four new entries across both primary and secondary markets. This momentum, however, faced challenges towards the end of 2023 due to rising interest rates and geopolitical tensions. Nonetheless, listing activity is expected to recover in the short term, reflecting a renewed investor interest and confidence in Qatar's economic prospects.
3: Attracting foreign direct investment
A key focus of Qatar's NDS-3 is attracting Foreign Direct Investment (FDI) into the country. In this context, the Simaisma Project, led by the Ministry of Municipality and developed by Qatari Diar Real Estate Investment Company, is set to become a new cultural landmark, aimed at empowering the private sector and boosting FDI. With new policies being implemented to facilitate and attract foreign investments, an increase in inbound deals is expected in the near to mid-term. These efforts will complement the existing M&A landscape, creating a more diversified and dynamic deals environment.
4: Increased drive for PPPs and privatisation
An additional significant driver for M&A activity in Qatar is the increased focus on Public-Private Partnerships (PPPs) and the privatisation of national assets. As part of the broader strategy to attract FDI, the Qatari government is actively promoting PPPs to leverage private sector expertise and investment in key infrastructure projects. This move towards privatisation is expected to unlock substantial opportunities for foreign investors, providing them with access to lucrative sectors such as utilities, transport, education and healthcare. The integration of PPPs and privatisation into the National Development Strategy 3 underscores Qatar's commitment to fostering a more dynamic and investment-friendly environment, thereby enhancing the overall attractiveness of the country as a destination for global capital.
5: Digital and tech transformation
Qatar has strategically invested in digital infrastructure such as cloud services and high-speed connectivity, and has strengthened its cybersecurity measures for data protection. Key initiatives, such as the digital factory, aim to transform the government into a citizen-centric service hub, facilitating seamless interactions and improving service delivery. Qatar has also moved from 78th to 53rd place out of 193 countries in the United Nations (UN) E-Government Development Index (EGDI) for 2024. It is poised to continue its upward trend in the EGDI over the next two years, bolstered by the implementation of its Digital Agenda 2030. In June, Qatar’s Ooredoo announced a partnership with NVIDIA to roll out its AI technology across its data centres in Qatar, Kuwait and Oman.
The outlook for the foreseeable future looks optimistic. The combination of strategic national planning, robust outbound investments, and new policies aimed at attracting FDI is set to invigorate the deal-making landscape, positioning Qatar for a dynamic and prosperous future in the global M&A arena.
Looking ahead
As Qatar continues to pursue its ambitious goals of economic diversification and global influence, several key trends will define its trajectory in the next six months, particularly in the areas of outbound investment, foreign direct investment, and private sector engagement.
Qatar is set to remain a highly active player in outbound investments, with the Qatar Investment Authority (QIA) leading the charge. QIA’s global investment strategy is focused on diversifying its portfolio and expanding internationally, with significant investments in sectors such as renewable energy, technology, and real estate. Recent government-backed deals, including plans to acquire LNG power plants in Pakistan and joint-venture partnerships to finance, build and operate renewable plants in Sub-Saharan Africa, reflect Qatar’s commitment to support the global transition to a low-carbon future.
At the global level, Qatar is also strengthening partnerships through key government-to-government agreements with countries, such as Kazakhstan and Rwanda. In Kazakhstan, Qatar is helping boost gas production by 18% with new processing plants, while also supporting energy development with power and hydroelectric projects. In Rwanda, the focus is on enhancing trade, finance, and investment ties.
On the home front, Qatar is ramping up efforts to attract FDI through investment-friendly policies. A major initiative is the Simaisma Project, an 8-million-square-metre development featuring a resort and entertainment attractions, set to boost tourism and diversify the economy beyond oil.
Qatar's bold initiatives reinforce its commitment to cementing its position as a leading regional and global economic powerhouse, as it moves towards a more sustainable and diversified landscape.
