The UAE and Saudi Arabia were the preferred destinations for mergers and acquisitions (M&As) due to their favorable business policies in the Middle East and North Africa (Mena) region for the first nine months of 2024, a report showed on Sunday.

According to the EY Mena M&A Insights 9M 2024 report, 239 deals were struck in these two countries during the period, reaching a combined disclosed value of $24.5 billion. They were also among the top Mena bidder countries in terms of deal volume and value, representing 52 per cent and 81 per cent of the total respectively.

The Mena region witnessed an increase in merger and acquisition (M&A) activity with a total of 522 deals amounting to $71.0b. When compared to the same period in 2023, deal volume this year grew by 9 per cent, while deal value saw a 7 per cent rise.

Sovereign wealth funds (SWFs), such as the Abu Dhabi Investment Authority (Adia) and Mubadala from the UAE and the Public Investment Fund (PIF) from Saudi Arabia, continued to lead the deal activity in the region to support their countries’ economic strategies.

During the first nine months of 2024, cross-border M&As played a significant role, contributing 52 per cent of the overall volume and 73 per cent of the value. Meanwhile, domestic M&A value increased year on year by 44 per cent to reach $19.3b, primarily driven by government-related entities (GREs) transactions in the oil & gas, metals & mining and chemicals sectors. Domestic M&A activity accounted for 48 per cent of the total number of deals, EY data showed.

The US remained the preferred target destination for Mena investors with 32 deals amounting to $18.3 billion, EY said. “With the US-UAE Business Council playing an active role in promoting partnerships, prominent US companies are collaborating with UAE public and private sector stakeholders on various initiatives,” a statement said.

Brad Watson, EY Mena strategy and transactions leader, said: “Deal activity in the Mena region has seen a notable improvement this year, driven by strategic policy shifts, the liberalization of investment regulations and robust capital inflows from investors. With companies actively seeking opportunities to grow and diversify their operations, we have observed a surge in cross-border M&A volume and value. In particular, the UAE remained a favored investment destination during the first nine months of 2024 due to its business-friendly regulations and efficient legislative framework. Meanwhile, strengthening regional relationships with Asian and European economies, alongside existing ties with the US, enabled Mena countries to gain access to larger and growing markets.”

Ten of the Mena region’s highest-valued M&As in the first nine months of 2024 were concentrated in the GCC. The largest transaction took place in February 2024, when Clayton Dubilier & Rice, Stone Point Capital and Mubadala Investment announced their acquisition of Truist Insurance Holdings for $12.4 billion. Meanwhile, Saudi Arabia recorded the largest disclosed domestic deal with Saudi Aramco’s acquisition of a 22.5 per cent stake in Rabigh Refining and Petrochemical Company from Tokyo-based Sumitomo Chemical for $8.9 billion. In March 2024, PAG, Mubadala and ADIA invested $8.3 billion in a 60 per cent stake in the Chinese shopping mall company Zhuhai Wanda Commercial Management Group.

Insurance and oil and gas were the most attractive sectors for investors in the first nine months of the year, representing 34 per cent of total deal value, the data showed.

The first nine months of 2024 saw 248 domestic deals with a combined disclosed value of $19.3 billion, marking a seven per cent increase in M&A activity. GCC players were involved in 81 per cent of the deals, reflecting a high level of intra-regional M&A activity. There were 139 deals within and between the UAE and KSA, accounting for 56 per cent of the overall domestic M&A volume.

With increasing emphasis on digital transformation and shifting consumer patterns, technology and consumer products witnessed 78 deals, representing 31 per cent of the total domestic M&A volume. Meanwhile, the oil & gas and metals & mining sectors became the major contributors in terms of M&A value with 19 deals amounting to $10.9b. Notably, oil & gas accounted for 46 per cent of the total deal value.

Saudi Arabia dominated the lists of target countries as well as bidder countries, with the UAE, Morocco, Bahrain and Egypt featuring in both rankings as well.

With Mena emerging as one of the most attractive destinations for foreign direct investment (FDI), inbound deals towards the region in the first nine months of this year rose by 20 per cent y-o-y in terms of volume. Meanwhile, deal value surged by 47 per cent compared to the same period in 2023. The first three quarters of 2024 recorded 127 inbound deals with a total disclosed value of $10.4 billion.

The US and the UK together accounted for 42 per cent of total inbound M&A activity. The technology and professional firms & services sectors reported the highest deal volume and value, contributing 48 per cent and 39 per cent respectively. The US contributed 33 per cent of the total deal volume in these sectors, with 80 per cent of these deals being partnerships with UAE, showcasing strong US interest in the UAE’s technology and professional services, driven by rising digitalisation and artificial intelligence adoption.

During the first nine months of 2024, outbound activity was the largest contributor to total deal value at 58 per cent, with 147 deals that amounted to $41.4 billion. Insurance and real estate accounted for 50 per cent of the deal value in this space, mainly resulting from two mega investments involving Mena-based SWFs. The US and China represented 70 per cent of the outbound deal value. Asia and North America together contributed 46 per cent and 77 per cent of the total outbound deals by volume and value respectively

Anil Menon, EY Mena Head of M&A and Equity Capital Markets Leader, says: “The Mena M&A market is extremely buoyant and we expect to end the year with more than 700 deals, which will be very close to the historic five-year high of 750 deals. This is a remarkable achievement in the context of uncertain geopolitics and higher cost of capital.”