Dubai: Mergers and acquisitions activity (M&A) in the Middle East and Africa (MEA) region y in 2014 dropped 9.4 per cent below the post-crisis high of $63.9 billion in 2013to $57.9 billion, according to data released by Mergermarket, a mergers & acquisitions (M&A) intelligence service.
Despite the decrease, 2014 still represented the fourth highest annual value on Mergermarket record (2001). Quarterly values fluctuated throughout the year, but ended on a high note in the fourth quarter with a 158.6 per cent increase to $22.5 billion from $8.7 billion in the third quarter — accounting for 38.9 per cent of the total.
A sudden rush for large deals during the fourth quarter saw four transactions each valued in excess of $2 billion, accounting for 23.7 per cent of 2014’s total value. The final dash for larger deals was in stark contrast to deal sizes throughout the rest of the year, underlined by the average price paid dropping 15.9 per cent to $202.6 million from $241 million in 2013.
Deal flows showed that private equity activity was a key driver in 2014, accounting for 10.5 per cent of total M&A, up from just 4.2 per cent in 2013 and the second highest proportion on record.
The value of buyouts more than doubled from $2.7 billion in 2013 to $6.1 billion in 2014. The year saw the most exits within a single year on record at 38 deals worth $5.5 billion, up 48.3 per cent by value compared to $3.7 billion on 29 deals in 2013. This will come as a welcome boost for those investors yet to register any returns from investments in Africa, as well as those looking to invest dry powder.
According to Mergermarket intelligence, private equity deal sizes have been creeping up as private equity houses are raising more substantial funds and are looking to conduct larger deals. “It was common a few years ago for some funds to go as low as $20 million to $30 million, now funds are indicating to us a minimum size of $50 million,” said a Mergermarket statement.
The technology, media and telecommunications (TMT) sector saw 74 transactions in 2014 with a total value of $12.3 billion, accounting for 21.2 per cent of the region’s total and representing a 12.5 per cent increase by value. The region’s Technology space was a highlight and saw the most deals on record with 44 transactions worth $3.8 billion, up from just 24 in 2013.
A drop in inbound investments resulted in the Energy, Mining & Utilities sector being knocked from the top position in 2014. The 59 deals targeting the sector totalled $11.1 billion, representing a 19.2 per cent market share – this marked a 52.2% drop by value and 14 fewer deals than 2013.
Total inbound activity to the region declined in 2014 compared to the previous four years with deals valued at $14.6 billion decreasing 58.9 per cent from 2013 $35.6bn). Asian companies were the main investors with 40 deals worth $5.8 billion accounting for 40 per cent of the total.
Outbound activity in 2014 witnessed a 73.5 per cent increase in total value to $26.2 billion from $15.1 billion in 2013. European targets represented the largest portion of MEA investments with 77 deals worth $8.8bn accounting for 33.5 per cent of total outbound value.
