60% Decline In Mergers, Acquisitions Activity In Egypt Last Year: Pwc
Date
3/31/2024 11:15:01 PM
(MENAFN- Daily News Egypt) In a recent report, PricewaterhouseCoopers (PwC) highlighted a 60% decline in mergers and acquisitions (M&A) activity in Egypt during the past year. This downturn had broader implications, affecting overall activity in the Middle East region. Let's delve into the key points:
Regional Impact:
The Middle East witnessed a 30% decline in the total number of deals, recording approximately 447 transactions compared to the previous year. Notably, the Kingdom of Saudi Arabia and the United Arab Emirates maintained robust deal levels during the same period.
Egypt's Changing Trajectory:
Egypt had been on a positive trajectory, achieving a significant number of deals in the region. However, several factors contributed to the decline: Currency Fluctuations: The Egyptian pound (EGP) depreciated against the US dollar (USD). Interest Rate Hikes: Rising interest rates impacted investment decisions. General Economic Challenges: These hindered overall performance.
Despite these challenges, the devaluation of the pound attracted investors to sectors such as energy, health, financial services, and tourism.
Foreign Investment Potential:
Egypt's high population and existing infrastructure create opportunities for foreign investors. Notably, the recent $35bn investment deal by ADQ in Ras Al-Hekma aims to transform the area into a global tourist destination.
Prominent Deals:
The Emirati firm“Global Investments” secured a 30% stake in the shares of Eastern Company, Egypt's largest tobacco manufacturer. This deal, valued at $625m, ranked third in terms of volume in 2023 across the Middle East.
Middle East M&A Market Performance:
Despite global market fluctuations, the Middle East maintained consistent M&A performance in 2023. While the first half of 2023 showed improvement over 2022, challenges like rising interest rates and economic slowdowns impacted overall recovery.
Global Trends:
Globally, M&A activity declined significantly, shrinking to $2.5trn in 2023 (compared to the peak of $5trn in 2021). The number of deals also decreased by 17%, totaling 55,000 last year (compared to 65,000 in 2021). Deal makers adapted by focusing on smaller transactions, leveraging their flexibility under challenging circumstances.
Small-Sized Deals:
In the Middle East, the trend leaned toward small-sized deals, often falling within the range of $100m or less. These deals demonstrated resilience in the face of interest rate fluctuations, constituting approximately 92% of the total deals by the end of 2023.
The evolving landscape of mergers and acquisitions underscores the need for strategic decision-making in an ever-changing economic environment.
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