MENA M&A activity records 23% dip in 2017 H1

In the first half of 2017, MENA M&A activity witnessed 192 deals, representing a decline of 23 percent when compared with 250 deals in the first half of 2016. Announced MENA deal value also decreased by 17 percent to $31.9 billion in H1 of 2017, down from $38.9 billion in the same period of 2016.

Out of the total deals in H1 2017, outbound deals accounted for the highest deal value reaching a total of $ 19.6 billion from 61 deals. Domestic deals generated the highest amount of activity in the first half of the year with a volume of 93 deals and value of $5 billion. Inbound M&A activity reached a volume of 38 deals with a value of $7.3 billion.

The Dubai Aerospace Enterprise acquisition of AWAS Aviation Capital Limited for $7.5 billion was the largest deal announced during H1 2017.

Phil Gandier, MENA Transaction Advisory Services Leader, EY, says: “In the first half of 2017, 61 percent of the acquisition capital was allocated outside MENA, making MENA a net exporter of capital. We expect this trend to continue for the remainder of the year as investors continue to see more value and lower risk in non-MENA markets.”

The average deal value of inbound deals rose by 36 percent and outbound value by 123 percent in H1 2017 when compared with H1 2016. On the contrary, the average deal value of domestic deals witnessed a significant decrease of 74 percent in the first half of 2017 when compared to the first half of 2016.

Q2 2017 MENA M&A performance

The second quarter of 2017 experienced an overall decline in the volume and value of deals when compared to Q2 of 2016. Announced deal values in Q2 2017 reached 80 deals with a value of $12.7 billion, a drop from the 135 deals reaching $20.1 billion announced in Q2 2016.

Oil and gas sector deals generate highest deal value

Of the 192 deals in the MENA region, the top 10 contributed over 76 percent to the total deal value registered in the first half of 2017. Oil and gas was the top-performing sector by deal value reaching $11.5 billion in H1 of 2017. The airline industry followed with $7.5 billion, power and utilities deals with a total deal value of $3 billion, and the chemicals sector with deals amounting to $2.2 billion in value. The banking and capital markets industry, which accounted for $1.9 billion in deal value, was the fifth highest performing M&A sector in H1 2017.

Anil Menon, MENA M&A and Equity Capital Markets Leader, says:“ There is significant deal activity in retail and consumer products as well as oil and gas, and a secular shift in capital allocation to the e-commerce and tech sectors in MENA. The market is loading up for a spate of deal announcements soon after summer.”