Complex Made Simple

Mergermarket releases Q1 Middle East Trend Report

Egyptian market sees three new listings; UAE outbound deal value falls 80 per cent.

Mergermarket, the world’s leading intelligence and news service for mergers and acquisitions, has released its Q1 Middle East Trend Report ahead of the Middle Eastern M&A and Private Equity Forum, to take place in Dubai on 4th May.

The Egyptian stock exchange has approved three new listings in 2015 – Edita Food Industries S.A.E., Orascom Construction (following its OCI demerger) and Inter – Cairo For Aluminium Industry.

A further eight companies are expected to list on the Egyptian Exchange in 2015, which will make this year one of the busiest in recent history, with only five companies going public since 2008. Orascom Construction is the first foreign company to have performed a dual listing on the Egyptian market, raising US $185m. The company is also listed on NASDAQ Dubai.

Despite being the most targeted country within the Middle East region, the UAE undertook seven outbound deals worth US$ 526m in the first quarter, a substantial 80 per cent drop in deal value and a 50 per cent drop in deal count when compared to Q1 2014. Qatar overtook the UAE to become the most active outbound investor in Q1 2015, with two deals worth US$ 1.9bn representing 46.4 per cent of the region’s overall outbound deal value. At Mergermarket’s upcoming M&A and Private Equity Forum, Egypt will be highlighted as a market with promising growth opportunities for outbound Middle East investment.

Chris de Gabriele, Client Coverage, Standard Bank, commented: “Standard Bank is Africa’s largest bank with an origination office in Dubai to cover Middle Eastern clients. Our interest is predominately cross border activity from MENA into Sub-Sahara Africa. We have increasingly seen momentum building over the last couple of years, especially from institutional investors seeking alpha in Africa’s frontier markets as well as regional Middle Eastern champions looking to create a significant presence on the continent. Our experience is that interest from the Middle East into Africa is sector agnostic, whether it’s in natural resources, real estate, utilities or infrastructure however, in the next 12 to 18 months we expect interest to be strongest in consumer related activity, with investors betting on the rising African consumer power.”

Ongoing M&A situations yet to be officially announced could bolster deal values later in the year, especially if oil prices begin to rise. According to Mergermarket intelligence, on 17th March it was announced that Emirates National Oil Company (ENOC), a 54 per cent shareholder in Dragon Oil, are in talks to purchase the remaining shares at a premium to the $7.60 closing share price, a higher premium than was offered when they bid unsuccessfully in 2009.

Ruth McKee AlGhamdi, Head MENA, Mergermarket, commented: “The outlook is healthy for Middle East M&A for the remainder of the year despite the slow start to the year and the drop in oil prices. We are expecting a number of deal announcements in the healthcare, financial services, food and beverage, retail, industrial, construction, engineering, infrastructure, education and ICT sectors. Several new regional private equity funds are being raised and this will fuel the mid-market buyout pipeline, particularly in UAE, Saudi Arabia, Egypt and Morocco. On the initial public offering front, it is expected to be a busy year for listings in Egypt with at least eight companies expected to list on the Egyptian stock exchange on top of the three already listed this year. The opening of the Saudi stock market to foreign investors in June is also expected to spur more IPOs.”

Mergermarket also reported that GS Energy, a privately held energy unit of Korean conglomerate GS Group, is planning to partner with private equity firms for a planned 5 per cent stake acquisition in ADCO Onshore Concession for 15 Abu Dhabi-based oilfields.

The Middle Eastern M&A and Private Equity Forum will take place at the Ritz Carlton DIFC, Dubai, on Monday 4th May 2015. Expert speakers and panellists from across the region will review the MENA market and provide forward looking discussion on key trends and deal drivers likely to be seen in the region over the next year. Mergermarket’s lead strategic partners are EY and Baker & McKenzie, in addition to strategic partners Standard Bank, iDeals, Kroll, and Instinctif Partners.