The UAE has remained the most attractive foreign investment destination in Q1 2020 as the value of merger and acquisition activity in the Middle East during the period rose by $5 billion in comparison to the previous quarter.
The cumulative value of foreign direct investment in the UAE climbed to $140.3 billion at the end of 2018, as the second-biggest Arab economy continues to implement reforms and attract foreign capital despite global economic headwinds.
The total merger and acquisition activity jumped to $9.3 billion out of 95 deals in Q1 2020. The top five largest deals were valued at $7.4 billion, which accounts for almost eighty percent of total deal values.
“Given the current economic environment and the level of uncertainty that exists due to Covid-19, we can potentially expect two possible scenarios moving forward. The first is a further slowdown in the M&A volumes and values in the next two and possible three quarters reflecting on the global uncertainty, investors’ anxiety and shift of priorities.” – Omar Momany, partner and head of the Corporate and Commercial Practice Group at Baker McKenzie Habib Al Mulla.
The second scenario is that growth continues but at a much slower pace and value, similar to that of Q1 of the current year, driven by companies being interested to join forces in an attempt to mitigate losses and consolidate and driven by availability of quality assets and targets available at lower valuation. This is certainly an unprecedented time and one can only speculate as to what the short-term future will hold in relation to M&As in the region,” – Momany concluded.
