Complex Made Simple

Mergermarket holds Middle East M&A and Private Equity Forum

Executives believe region’s valuation gap is greater than other markets

Mergermarket, the world’s leading intelligence and news service for mergers and acquisitions, hosted the Middle Eastern M&A and Private Equity Forum at the Ritz Carlton DIFC, on Monday 4th May.

Lead strategic partner EY launched their Capital Confidence Barometer, while expert speakers and panellists from across the region reviewed the MENA market and provided forward looking discussion on key trends and deal drivers likely to be seen over the next year.

Live voting at the Forum addressed issues including deal outlook and Private Equity in the region. Asked whether the valuation gap for deals in the region was greater than in other markets, 60 per cent of audience members responded that it was.

On the subject of financing for deals, respondents indicated that most financing came from local banks, with international institutions playing a comparatively small role. Delegates were asked to consider with sectors were currently of most interest to Private Equity investors, to which the majority responded retail and healthcare.

Speaking on the side-lines of the Forum, Will Seivewright, Partner, Baker & McKenzie, lead strategic partner for the Forum, said: “The increased interest in the Middle East from international private equity players is a hugely positive development in a market reacting to lower oil prices and regional instability. The Q1 dip in M&A transactions is reflective of short term uncertainty, however overall market sentiment is focused on regional demographics and so remains positive in respect of social infrastructure deals, including retail and hospitality, particularly in the UAE, Saudi Arabia and Egypt.”

EY, Mergermarket’s lead strategic partner for the Forum, launched its 12th edition of the Capital Confidence Barometer for 2015. The survey, which gauges CFO confidence in the MENA region, found that 56 per cent of MENA respondents expected their company’s deal pipeline to increase in the next 12 months, compared with 44 per cent globally, and that 53 per cent of MENA business are planning relatively larger deals in the coming year, compared to just 31 per cent globally. With 68 per cent of CFOs believing that the number of MENA acquisition opportunities is improving, EY’s findings for the region were mostly optimistic.

Phil Gandier, MENA Transaction Advisory Services Leader, EY, commented: “Our MENA Capital Confidence Barometer reveals an interesting picture, with broader confidence among MENA executives over the global outlook for deal-making, but an undercurrent of concern that the challenging regional geopolitical climate may impact conditions for a sustained pickup in investment and M&A. The key question is whether the general level of caution captured by the Barometer will shift as anticipated deal flow rises. Oil price stability, continued government spending and a calming of regional tensions would do much to bring M&A expectations back into equilibrium with the substantial growth opportunities on offer.”

Catherine Ford, Editor-at-Large, The Mergermarket Group, concluded: “Regional M&A practitioners remain cautiously optimistic about M&A, family owned businesses are looking for new ways to grow and are exploring the idea of outside investors to support those aspirations, conglomerates are broadening their reach and international players are looking at ways to access the growing middle class. So, despite the challenges there are clear signs that activity can increase.”

Mergermarket’s lead strategic partners for the Forum were EY and Baker & McKenzie, in addition to strategic partners Standard Bank, iDeals, Kroll, and Instinctif Partners.