Saudi Arabia to see M&A growth opportunities in 2023

09 April 2023 2 min. read

Saudi Arabia has become one of the region’s prime markets for companies eyeing mergers and acquisitions (M&A), according to analysis by PwC.

In its annual M&A Market Outlook, PwC recorded a total of 632 deals in the Middle East in 2022, out of which 89% (or 563 deals) were collectively recorded in just three countries: Saudi Arabia, the UAE, and Egypt. 106 of those deals involved Saudi companies.

Notably, total deal volume in the Middle East ended the year higher than the year previous, bucking a global trend which saw deal activity nosedive in most major markets amid economic and geopolitical turmoil. According to one estimate, total global deal value dropped by $2.1 trillion in 2022.

Deal Volumes by Country (2022)

“The Middle East is certainly not immune to the economic headwinds affecting M&A in the United States and Europe, but at the start of 2023, the mood here is more optimistic than most global markets,” said PwC Deals Markets Leader Romil Radia. He also noted the “enormous potential around the energy transition, and a strong focus on tech and digital acquisitions.”

Reflecting on the outlook for Saudi Arabia, Imad Matar, Transaction Services Leader at PwC, said: “We expect a further pick up in M&A activity in Saudi Arabia during 2023, despite a strong pipeline of IPOs, as the gap in valuation multiples between these two exit routes narrows for investors looking to sell assets. Meanwhile, the sovereign Public Investment Fund will continue to spearhead outbound Saudi cross-border transactions, as well as fuelling domestic deals.”

The odds that Saudi sees a record-breaking deal in 2023 are however not very high. Last year, a consortium led by BlackRock acquired a 49% stake in Saudi Aramco Gas Pipelines with a dizzying $15.5 billion investment. The deal still stands as the world’s largest energy infrastructure transaction.

Middle East Deal Volumes by Transaction Type

In another big 2022 deal, Saudi Arabia’s Hassana Investment bought a 10.2% stake in various infrastructure assets owned by UAE’s DP World for a total of $2.4 billion.

The economic outlook for Saudi Arabia for 2023 is seen as generally good considering the finicky global financial state that has been hit with waves of uncertainty thanks to instability caused by the war Ukraine and creeping inflation. Growth targets and positive change is part of the roadmap for the Kingdom’s Vision 2030 plan, which seeks to diversify the economy, moving away from oil being their main commodity.