2025 TransAct Middle East

Within the ERS sector, the Middle East is increasingly focused on renewables and utilities, while also pursuing strategic growth in oil and gas. This dual approach, combined with ambitious net zero targets, is driving economic diversification and fueling M&A activity as countries in the region transition to clean energy. 

Key investments in clean energy technologies and essential infrastructure include Saudi Arabia’s Al Shuaibah solar plant that plans to increase renewable energy capacity to 130 GW by 2030.27, the Mohammed bin Rashid Al Maktoum Solar Park in the UAE and Egypt’s plan to raise renewables’ share to 42% by 2030. This sets the tone for increased M&A activity within the ERS sector in the coming months, as regional players ramp up efforts to diversify energy portfolios and meet ambitious climate targets.

The TMT sector has become increasingly prominent in Middle Eastern M&A growth. Technology stands out as one of the key areas driving change within the sector. Spanning subsectors such as telecommunications, entertainment, and tower companies, technology is accelerating change across the region, as Middle Eastern countries rapidly advance their digital transformation strategies.

The rise of AI, particularly GenAI, along with national digitisation initiatives, has fueled a surge in demand for data centres. This demand reflects the need for substantial computational power and storage capacity to support the region’s ambitions. The UAE has become a hub for data centre activities, with market leaders such as Khazna Data Centers and Gulf Data Hub commanding a significant share of the market. Recent dealmaking activities highlight this trend. For instance, KKR, a leading global investment firm, and Gulf Data Hub recently formed a strategic partnership to scale one of the Middle East’s largest independent data centre platforms.

In 2024, industrial deals dominated the Middle Eastern M&A market, with 110 transactions - the highest across all sectors. One notable transaction was ADNOC’s US$3.6 billion acquisition of OCI’s 50% + 1 share stake in Fertiglobe, a leading ammonia and urea producer, raising ADNOC’s shareholding in Fertiglobe to 86.2%. This move reflects the shift towards a growing demand for low-carbon ammonia, driven by global decarbonisation efforts and further reinforces the UAE's commitment to sustainability.

Despite the 2024 challenges of high capital costs and increased regulatory scrutiny, the healthcare and life sciences sector in the Middle East demonstrated resilience, with deal volumes remaining consistent with 2023 levels. The region’s efforts to enhance medical infrastructure, adopt digital health solutions and focus on personalised care continue to drive M&A activity.

The consumer M&A market’s post-pandemic recovery faced renewed challenges in early 2024, with sticky inflation and rising interest rates dampening sentiment. These headwinds contributed to a 11% drop in deal volumes compared to 2023. However, compared to other sectors, it outperformed, with retail, hospitality and leisure, and consumer goods recorded the highest deal volumes, showcasing areas of resilience amidst broader economic pressures. The Middle East is witnessing a surge in international investor interest in the retail and consumer sector, driven by a combination of strong economic fundamentals and evolving consumer behaviours. Two key highlights include US-based TJX Companies US$360m investment for a 35% stake in UAE’s Brands For Less and Huda Beauty’s recent sale of its stake in Kayali (a UAE based fragrance company) to US growth equity firm General Atlantic.

As inflation moderates, central banks, including the US Federal Reserve, have cut rates, but the pace has slowed. With rising long-term rates in the US, securing attractive returns and refinancing may become more challenging.

However, the financial services (FS) sector in the Middle East continued to see robust activity in 2024, with asset and wealth management and banking and capital markets leading in deal volumes.