2024 TransAct Middle East

In the first half of 2024, the consumer markets industry in the region experienced several challenges, including uneven inflation across the region, high interest rates and the on-going geopolitical instability, which affected consumer sentiment in the region. Despite these challenges, there is a growing appetite from international large corporations and private equities in the consumer market sector in the region with more deals in the pipeline. This is particularly driven by the momentum of digital shopping which continues to grow in the region with retailers in the GCC increasingly implementing omnichannel strategies to cater to the evolving needs of consumers. 

Deal volumes in the Middle East are driven by strategic initiatives at both the government and national oil and gas company levels. Saudi Arabia and the UAE are leading the charge in sustainability and green economy initiatives, with the UAE Energy Strategy 2050 aiming to triple renewable energy contributions and reach net zero emissions by 2050. 

Technology remains central to various sectors, from AI to renewable energy. The region's continued push towards smart cities, 5G rollout and cloud adoption has led to heightened interest in telecom towers, data centres and digital infrastructure. Governments across the GCC are heavily investing in national digital strategies which creates significant opportunities for the M&A activity in the region.

The financial services (FS) deal market in the Middle East remained consistent into the first half of the year, adapting to the uncertainties from the macroeconomic environment and the geopolitical tensions. Specific factors impacting the mergers and acquisitions industry in FS include the rapidly growing importance of digitalisation, AI implementation, green finance and sustainability. Also, the uncertainty around the quantum of interest rate cuts which has already been signalled by central banks globally. As organic growth becomes increasingly more difficult, mergers and acquisitions will continue to be seen as a more worthwhile option to companies in the financial market looking to expand and transform their business models. Additionally, divestments are being more commonly used by key market players to dispose of distressed portfolios, reallocate resources and optimise business models.

In the Middle East, construction and construction materials industries were dominant, driven by significant investments in the UAE and Saudi Arabia. Environmental and decarbonisation considerations in the manufacturing industry are also  gaining momentum in the region, as countries such as the UAE begin to act  on their commitments made during the COP28 climate summit held in Dubai last year¹. Notable among these is the new US$30bn fund to support  environmentally conscious projects, further creating opportunities for new deals.

¹ _{Asia Pathways. COP28: Commitments, contradictions, contention, and challenges. December 2023.}

Despite regulatory challenges and rising interest rates, the healthcare and life sciences sector has seen a 30% increase in deal activity compared to H1 2023. The standout transaction of H1 2024 was the sale of a majority stake in Aster DM Healthcare for over US$1 billion to a regional investor group. Egypt, notably, led in deal volume, accounting for 50%, driven partly by significant government-led modernisation efforts and an active private sector. However, most deals were small, with four investments targeting a single entity.