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28 March 2024

Abu Dhabi eyeing M&A deals

Published
By Reuters

Certain Abu Dhabi entities are looking at snapping up regional competitors but tough credit markets and global uncertainty will slow any M&A activity, a top executive at independent investment bank Moelis & Co. said. 

Augusto Sasso, co-head of Middle East and North Africa (Mena) investment banking, said Abu Dhabi clients were "actively looking" at acquisitions with the focus firmly on the Mena area. 

"For the most part, the M&A activity that we're involved in is mainly inter-regional," he said at the Reuters Middle East Investment Summit. 

"It's not international acquisitions, it’s buying companies that are in similar markets. It's more localised than it has ever been." 

Sasso said any deal depends on how quickly access to capital markets recovers, and transactions may not transpire for a year. 

Among sectors ripe for M&A in general, the banker expects the industrial sector to lead deal flow in the region and sees aerospace, metals and mining, chemical firms and real estate as the sub-sectors to potentially drive activity. 

"Right now it's very tough to do an acquisition unless it's a stock-based acquisition. We appreciate some of the things we're doing now are probably early phase." 

Moelis, which made its name in the region by advising on the $25 billion restructuring of conglomerate Dubai World, is now focused on Abu Dhabi. 

"It's probably our No. 1 focus outside of Dubai," Sasso said. "We've got mandates in Abu Dhabi with sovereign wealth funds and with private companies. 

"The opportunities in Abu Dhabi are non-restructuring related, they're M&A and capital markets related." 

Sasso reiterated his forecast for a gradual recovery in M&A activity in the Gulf Arab region. 

The amount of fee income raised by investment banks from mergers and acquisitions was $165.1 million in the first three quarters of 2011, down nearly 41 per cent from the same period last year, according to Thomson Reuters data. 

Bankers are hoping sovereign funds will help revive the market in the second half of the year. 

"It'll be much more measured this time. Companies and sovereign wealth funds will be much more careful about how they approach the M&A market," Sasso said. 

"You've got so much dislocation everywhere else in the world. Abu Dhabi and Dubai, and certain countries in the Middle East, are kind of a safe-haven right now financially." 

The investment bank hired JPMorgan banker Yorick Van Slingelandt as managing director and co-head of Mena investment banking this year as it bids to snap up mandates across the Gulf, especially in Qatar, Bahrain and Kuwait.