Complex Made Simple

Mergers and acquisitions take a plunge in Q1 2015

The highest-valued deal of the quarter was the $1.5 billion demerger of Orascom Construction

The Middle East capital markets performed very well in 2014 despite a fall in oil prices. However, the first quarter of 2015 had a slow start compared with the last quarter of 2014.

Only nine deals in the region worth $1.8 billion were recorded in the first quarter of 2015, a 71.8 per cent decrease in deal value on Q4 of last year and the lowest deal count since Q4 2011, Mergermarket says in one of its recent reports.

“We expect deal flow to continue its growth trajectory in 2015 at a normalised year-on-year growth rate of up to ten per cent. The pipeline for new deals looks very robust and we expect to see growth in both deal volumes and deal values in 2015. Egypt is particularly leading that, which is a vote of confidence in the country’s political stability.”

The highest-valued deal of the quarter was the $1.5bn demerger of Orascom Construction to OCI NV shareholders, which made construction the best-performing sector.

According to Mergermarket, Qatar was the most active outbound investor in Q1 2015, with two deals worth $1.9bn, representing 46.4 per cent of overall market share.

Qatar Investment Authority (QIA), the foreign investment arm of the Qatari government has been aggressively buying assets worldwide for the past three years.

In January, a Qatari led consortium won a $4bn battle to buy London’s Songbird Estates, which is essentially the banking district.

In terms of outbound M&A activity, Qatar is the only country to overtake the UAE to in Q1 deal value since 2008, highlighting its emergence as an active overseas investor.

Tahan Thraya, Head of Baker & McKenzie Habib Al Mulla’s UAE Corporate/M&A Group, says: “2014 was a strong year for cross-border M&A activity in the Middle East and the signs are already very positive that 2015 will be even more robust.

“We are seeing great interest in the region from international private equity players, particularly in the retail, hospitality and education sectors, and despite the drop in oil prices, stable markets such as the UAE and Saudi Arabia are experiencing significant M&A activity, both inbound and outbound.”