In the MENA region, mergers and acquisition (M&A) deals increased by 4% in 2023, reaching $86 billion in 2023, with the support of sovereign wealth funds across the region. 

An EY report found that the GCC region accounted for much of MENA’s dealmaking moves, recording a majority of 565 deals valued at $83.2 billion. Despite geopolitical tensions, rising cost of capital, and global economic uncertainty, such results signify the strength of the region’s M&A market.

The UAE and Saudi Arabia made up 305 deals valued at $24.8 billion.

“Dealmaking remained strong in 2023. Sovereign wealth funds led M&A activity in MENA with the focus on national development and investing in sectors of the future,” said Brad Watson, EY MENA Strategy and Transactions Leader.

More specifically, the UAE set its mark as investors’ preferred destination, owing to the Gulf state’s business-friendly environment, regulatory practices, and legal framework. 

Outbound deals attributed the largest share of M&A deal values in 2023, reaching 208 deals valued at $53.5 billion, as noted by EY. Meanwhile, the technology sector saw the highest M&A activity, with 141 deals.

Over the past few years, M&A dealmakers have confronted challenges, including rising interest rates, geopolitical tensions, and recession fears, which contributed to a sustained downturn in deal activity.

However, now, M&A activity appears to be stabilizing. 

Watson said that M&A activity in MENA will persevere in 2024, given the region’s strong focus on energy transition and digitalization.

Experts say, flush with capital and liquidity, sovereign wealth funds in the region will be active, investing across regions and sectors to diversify and to support the growth of their national economies.

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