Finance & Capital Market

Middle East represents a rare ‘bright spot’ for M&A

In terms of dealmaking, the Middle East represents a rare ‘bright spot’ supported by government initiatives, strong GDP growth forecast and attractive risk-adjusted returns, said a report.
 
An overall increase in the LPCI from 6.2x to 6.6x, reflect a resilient M&A dealmaking environment as traditional sectors such as manufacturing, oil and gas services and industrials show strong levels of activity, said Lumina, the leading corporate finance advisory firm connecting capital and transactions across the Middle East and the UK, in its latest quarterly report, ‘The Lumina Private Company Index (“LPCI”) Q3 2022’. 
 
With significant infrastructure spending announced regionally, consolidation in the construction and contracting sectors are gathering pace with the aim of building regional champions with specialist skills to service increasingly large scale, complex projects. 
 
Capital flows
In parallel, the weak pound in the UK and the need for capital in the UK and Europe means that Lumina is increasingly seeing a two-way street of capital flows between the Middle East and Europe. Another key trend is the noticeable increase in capital being deployed into the region as multinationals and funds seek ‘boots on the ground’ and identify direct regional investments. 
 
The global slowdown in the tech sector has led to a marked reduction in funding rounds for technology companies, as the fallout takes root in the Middle East. However, capital is still available for deep tech, AI, digital transformation, cybersecurity and other technology creators. 
 
George Traub, Managing Partner at Lumina, comments: “Key investment themes for 2023 will prioritise preference for investment yield and structured returns over capital stocks in an increasingly higher interest rate and inflationary environment.  We also expect Private Equity fundraising to pick up significantly in the special situations, rescue funds and secondary strategies with the IPO boom providing exits for family conglomerates and private equity.”-- TradeArabia News Service