Last year, Middle East and North Africa’s (MENA) investor confidence reached unprecedented levels when the region saw a 13% increase in merger and acquisition (M&A) deals in 2022.

However, 2023 is the worst start to a year since 2020. The value of disclosed M&A deals involving the region reached $8.3 billion in Q1 2023, 65% lower than the value from the first quarter of 2022, according to Refinitiv statistics.

The MENA Investment Banking Review stated that deals announced in the region decreased by 26% from 2022. The number of deals declined 22% from last year and marked the lowest first-quarter deal count since 2020.

The value of inbound transactions involving a non-MENA acquirer plummeted 72% from a year earlier to $742.3 million, while domestic transactions fell 76% to $2.2 billion. MENA outbound M&A reached $5 billion, a 46% decrease from the value seen in Q1 2022.

The biggest deal involving the MENA was Saudi Arabia’s oil giant Aramco’s plan to pay $3.6 billion for a 10% interest in China’s privately held Rongsheng Petrochemical Co. The kingdom’s sovereign wealth fund then entered a second agreement, investing $1.3 billion in four construction companies.

Refinitiv classified the agreement between India’s Lenskart and Abu Dhabi Investment Authority (ADIA), which raised $500 million in finance, as the third-best deal with MENA involvement.

With acquisitions focusing on industrial enterprises accounting for 45% of MENA target M&A during Q1 2022, the industrials sector was the most active, followed by the consumer products & services sector with 15%.

The UAE, Saudi Arabia, and Egypt were the most targeted countries. In the first quarter of 2023, Morgan Stanley was ranked first among all publicly reported MENA engagement M&A financial advisors.