The value of mergers and acquisitions activities in the Middle East jumped by 43 percent in the first half of the year, compared to second half of 2010, according to Zephyr half year M&A Report issued by Bureau van Dijk (BvD).
The value of Middle East deals held well during the first six months of 2011 despite political uncertainty in the region. There were 222 transactions with target companies based in the Middle East, and they were worth a combined $10.2 billion, compared to $7.1 billion during July to December, 2010.
Qatar topped the value ranking with $3.6 billion from its five transactions, while the UAE and Kuwait were also important target countries with $3.5 billion and $1.1 billion respectively.
The first half is traditionally the stronger six months of the year in Middle East deal making. However, the value of overall deals in the period was driven down by weakened private equity activity, according to the report.
Overall transaction value was down 24 percent compared with the first six months of 2010, while the value of private equity deals plunged 84 percent.
There were just seven private equity deals with Middle East targets in the first half worth $25 million. This was the weakest result since 2007.
The largest deal by value with a target company based in the Middle East was a rights issue by Qatar National Bank worth $3.5 billion. While the funds raised will be put towards expansion, it is worth noting that the largest transaction in six months was a capital increase, so therefore not indicative of a strong M&A market.
Banks lead by value but healthcare is major growth sector. The number two deal by value, Centurion Investment’s $1.1 billion purchase of a 40 percent stake in UAE-based NMC Healthcare, is evidence of increased M&A targeting healthcare companies.
Kuwait-based hospital operator Health Insurance Hospitals’ Company was also the target of a top ten deal, with Kuwait Investment Authority providing $566 million for a 50 percent stake.
The report said as is usually the case, the banking industry accounted for the largest proportion of total deal value. Education/health was second placed, and the value of deals targeting companies in these segments was 48 times higher in the first half, compared with same period in 2010.
Jordan accounted for the largest proportion of total deal volume in H1 2011 – some 52 percent – but these were not high-value transactions, or their values were not disclosed. The total value of deals with targets based in Jordan was $209 million – equivalent to just 2 percent of all Middle East value in H1 2011.
The value of global deals grew by eight percent in the first six months of 2011 to $1,728 billion from $1,601 billion in the corresponding six months of 2010. The gain was recorded despite deal volume continuing a decline that began after second half of 2009, and suggests higher company valuations in first half of 2011 over first six months of 2010.