The value of deals targeting Middle Eastern companies fell for the third year in a row in 2011; at $ 13,716 million. The figure indicates that the region’s transactions were worth 23 per cent less than in 2010. However, the volume of deals fell more dramatically over the year – 58 per cent from 929 to just 386 – indicating that average considerations increased over the year, according to Zephyr Annual M&A Report Global, 2011. Qatar and the UAE secure first and second place in the region due to some significant deals that took place during the year.
Citing the factors behind the trend, the experts at Zephyr believe that one factor that contributed to 2011’s decline was the low level of private equity investment during the period. Just 11 deals backed by private equity firms targeted the Middle East during the year under review, and only two of those were worth $10 million or more. The transactions were priced at a total $34 million, a fraction of the $813 million that 2010’s 24 deals were worth.
However, investment in Qatar, UAE and Iraq were up on 2010. The Middle East’s largest deal of the year was Qatar National Bank’s $3,487 million rights issue, which completed in May. It was one of two transactions in the region worth more than $1,000 million, the other of which was Centurion Investment’s $1,089 million purchase of a 40 per cent stake in NMC Healthcare, an Emirati business.
The deals helped Qatar and the UAE secure first and second place, respectively, in terms of value. Investment in Qatar totalled $4,421 million in 2011, almost three times more than in 2010. Having attracted dealmaking activity worth $3,544 million, the UAE was 49 per cent up on the $2,374 million it yielded last year.
All of the other countries in the region – save Iraq – fell back on last year in terms of value. Kuwait, which topped the table in 2010 slumped 58 per cent from $4,245 million to $1,778 million.
Jordon led the way by volume, as it has every year since 2006, with 205 deals compared to the 49 which targeted businesses in the second-placed UAE. Nevertheless, 70 per cent fewer transactions took place in the kingdom in 2011 than in 2010.
Going by the sectors, banks accounted for lion’s share of deal value. The banking industry held on to its customary grip on Middle Eastern dealmaking by some way. Transactions targeting banks made up 46 per cent of the region’s overall value in 2011. Worth $6,343 million, the deals totalled more than three times the value of construction sector transactions in the same period. However, the year was the fourth on the trot that the financial services industry dropped in value.
Despite a number of sectors falling in value from 2010, others were up on last year. The most impressive improvement took place in the education and health industry, which increased by more than ten times on the back of the NMC Healthcare deal.
Private equity focused on Jordan during the year. Jordanian companies received $20 million in private equity funding in 2011, twice that of businesses in the UAE, which was second placed. The kingdom secured the top spot with Black Pearl Capital’s $15 million investment in Bank of Jordan.
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