The UAE and Saudi Arabia made up 90 percent of the mergers and acquisitions (M&A) deals completed by private companies in the first half of 2019.
According to the Q2 2019 Lumina Private Company Index (LPCI), buyers are seeing value in industrials and agri/food sectors and this is expected to accelerate into the second half of the year to other sectors such as healthcare and consumer.
However, the report said: “The construction and contracting sector continues to face significant challenges despite announced infrastructure spending across the region and the impact of these initiatives are yet to translate into deal activity.”
In addition, Lumina’s latest ‘State of M&A’ survey, which analysed mid-market M&A data from private companies, investment firms and advisors in the region indicates most active sectors as industrials, healthcare, and consumer with intra-GCC deals accounting for 63 percent of M&A activity.
George Traub, managing partner at Lumina, said: “According to respondents to our ‘State of M&A’ survey, the main reasons driving private company M&A are succession planning (46 percent), access to capital (34 percent) and diversification of markets (38 percent).
“Saudi Arabia is expected to lead the volume of transactions during the remainder of the 2019, based on elevated levels of deals preparations we are seeing from clients, fuelled by government led infrastructure and social reforms.”
Lumina’s report also indicates subdued private equity activity with little to no capital raising activity at fund level in the post-Abraaj era. However, secondary transactions continue to pique international private equity interest, both at a fund and portfolio level, which are expected to drive most of the private equity action in the region.
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