GCC market seals 59 M&A deals in Q3 2022, with Multiply topping the list

A report issued by the Investment Banking Department of Kuwait Financial Centre, Markaz, has revealed that the Gulf Cooperation Council (GCC) sealed a total of 59 mergers and acquisitions (M&A) deals in Q3 2022, indicating a growth of 23% year on year.

At 175%, Saudi Arabia recorded the highest level of growth in M&A quarter-on-quarter. The United Arab Emirates (UAE) recorded the highest level of growth year on year, at 50%.

According to a Zawya report, Multiply Group leads the GCC M&A in Q3 2022. It had invested $2.7 billion to acquire a 7% stake in Abu Dhabi National Energy Company.

The second largest transaction was recorded by Al Salam Bank. It sealed a $2.2 billion acquisition of Ithmaar Bank’s consumer banking businesses alongside a portfolio of sukuk issued by the Government of Bahrain and the group’s indirect shareholdings in Bank of Bahrain and Kuwait, Solidarity Group Holding, Mastercard Inc and the Benefit Company, the report added.

ADES Arabia Holding was third, acquiring the shares of seven entities of Seadrill Limited for a total consideration of $628 million. Awaiting regulatory approval, the company expects to seal the deal in Q4 2022.

Qatar Electricity & Water Company (Qatar Electricity) acquired a 40% stake in Nebras Power for a total consideration of $530 million, becoming the sole owner of the company.

The Saudi Public Investment Fund signed a non-binding agreement to acquire a 30% stake in Almosafer Travel & Tourism Company from Seera Group Holding, for a total consideration of $413.8 million. This includes an earn-out component adding up to $102.8 million and is based on an enterprise value of $998.6 million.

Overall transactions in Q3 2022

GCC acquirers have carried out a majority of closed transactions during Q3 2022 and Q3 2021. They account for 74% of the total transactions closed during Q3 2022, while foreign acquirers accounted for 19%. Buyer information for the remaining 7% is not available.

In comparison to a total of 23 transactions in Q2 2022, GCC acquirers closed 39 transactions within their local markets in Q3 2022. Notably, they targeted regional companies to a lesser extent, primarily investing in companies within their local markets and in international markets.

Compared to 24 cross-border transactions in Q2 2022, GCC acquirers sealed 18 cross-border transactions in Q3 2022. In these, UAE buyers stood first, accounting for approximately 44% of the total, followed by Saudi Arabia at 33% and Kuwait at 17%.

Further, Q3 2022 saw lower interest from foreign buyers as compared to Q2 2022 and Q3 2021. In Q3 2022, foreign buyers closed 11 transactions compared to 15 transactions and 13 transactions, in Q2 2022 and Q3 2021 respectively. UAE accounted for all the foreign-led transactions that closed throughout the quarter.

Transactions closed in Q3 2022 targeted companies operating across sectors. Among these, the sectors that witnessed major activity throughout Q3 2022 were the financial, industrial, consumer discretionary, and insurance sectors, accounting for 49% of transactions that closed throughout the quarter.

By the end of Q3 2022, there were a total of 32 announced transactions in the pipeline, compared to 30 transactions announced in Q2 2022. Saudi accounted for half (50%) of the total number of announced deals, followed by UAE at 25% and Kuwait at 19%. Compared to the previous quarter, Saudi and Kuwait were the only two markets that saw growth in the pipeline.

The remaining 6% of transactions involved Omani and Qatari targets. Bahrain ended the quarter with no transactions in the pipeline.