GCC M&A Volumes to Reach $25bn in 2010

DUBAI, UAE, May 4, 2010 /PRNewswire/ --

- GCC's Leading Investment Banks Predict a Solid Bounce-Back for Regional M&A in H2 2010 With Bulls Suggesting Volumes Could Reach US$100bn in 2011

Gulf M&A activity shows its first signs of life after two years marked by cost cutting and balance sheet repair. The first GCC M&A Barometer interviewed 27 international and regional investment banks. The survey was conducted by Zawya, the online business provider and M:Communications, the international financial communications agency.

Over 80% of investment banks expect the downward trend since 2007 to reverse in 2010, with total M&A value to reach $25bn. A significant proportion of the participants are bullish on their outlook for 2011. Some expect GCC M&A volumes to hit $100bn for 2011.

Historically, GCC M&A has constituted up to 10% of global M&A activity. This year it has reached 4%, compared to Europe's 15% share. However, led by the $10.7bn deal between India's Bharti Airtel and Kuwait's Zain for Zain's Africa services, the M&A sector now has an air of cautious optimism as key corporates' first quarter earnings show a return to double digit growth. Chief executives may now seek growth through acquisition strategies.

The GCC M&A Barometer's findings point away from distressed sectors such as real estate and focus on industries such as healthcare, financial services, energy and basic materials. Geographically, the majority of M&A are expected to take place within the GCC area, with Saudi Arabia leading the UAE and Qatar. Eighty-five percent of bankers expect mid-market transactions to dominate the M&A market in 2010.

The GCC M&A Barometer also confirms a number of barriers to increased M&A activity in the region: a continuing disconnect between corporates' own growth expectations and those of the market; "chief executive's egos"; and a lack of liquidity - most deals are expected to be financed through a combination of debt and equity.

Commenting on the survey, Jean Marc Paufique, Head of Zawya's Professional Investment Division, said, "It does appear that the corner has turned with a large majority of our panel of leading bankers forecasting an increase in M&A activity for 2010 with further acceleration in 2011."

Nicholas Lunt, Gulf Managing Director of M:Communications, added, "There is still a long way to go before we return to the heady days of the mid-decade, but the worst seems to be over in this region."

    Report from http://www.zawya.com/gccbarometer/

    Samantha Bartel Al Khalaf
    E-mail: [email protected]
    Tel: +971-4-3259675

SOURCE GCC M&A Barometer