Middle East's Economic Diversification Sparks Deal Activity
Mokshita P.
10X Technology

Middle East's Economic Diversification Sparks Deal Activity

PwC Middle East's TransAct Report highlights resilience and optimism in dealmaking. Economic diversification, decarbonisation, and technology adoption lead opportunities across sectors like infrastructure and clean energy.

In the latest TransAct report by PwC Middle East, titled “Strategic growth beyond oil: Economic diversification and decarbonisation expected to boost deal making in the region,” a surge in deal activity across diversified investment areas in the Middle East is anticipated. The report underscores a heightened on-ground interest and increased appetite that is ready to lead the region into a new era of growth and opportunity.

Despite facing global macroeconomic and financial headwinds in 2023, the Middle East's deal market has remained promising, exhibiting resilience supported by economic fundamentals and supportive government policies. This resilience has supported stability and investor confidence, resulting in a relatively active deal market compared to regions grappling with higher interest rates and recessionary fears.

The report highlights that the market's buoyancy is underpinned by the region’s solid economic fundamentals and supportive policies, with member nations undergoing digital transformation, strengthening non-oil sectors, and leading energy transition initiatives.

Experts at PwC Middle East suggest that businesses can use transactions such as mergers and acquisitions, divestments, joint ventures, or refinancing to gain a competitive edge and progress. Despite notable declines compared to 2022, the report anticipates an active and growing deal market in 2024 across many sectors, led by governments advancing agendas and diversifying economies.

Romil Radia, Regional Deals Clients & Markets Leader at PwC Middle East, emphasised, “The Middle East's M&A market has shown remarkable resilience, boosting investor confidence and increasing active dealmaking. We anticipate that 2024 will be a year of growth driven by economic diversification goals, decarbonisation, and a focus on localisation and value creation."

Imad Matar, Transaction Services Leader at PwC Middle East, noted, “Deal making has remained resilient in Saudi Arabia, particularly in non-oil private sectors such as infrastructure, industrial manufacturing, and clean technology industries."

The report also discusses opportunities emerging from net-zero targets and energy transition considerations, opening avenues for funding critical infrastructure and technology development, including hydrogen, wind, solar, and carbon capture. Additionally, there is a growing demand for investments in clean energy, while the technology sector, encompassing cybersecurity, cloud computing, and e-commerce, is ready for growth in 2024.

PwC Middle East experts advise that attracting and retaining talent should be prioritised, with a focus on proactive skills development and education to prepare the workforce for the changing business landscape. To remain competitive, businesses and wealth funds must remain agile, using dealmaking to navigate market developments, with a focus on technology, innovation, infrastructure, and renewable energy sectors.

The report concludes that the Middle East is primed for a surge in deal activity in 2024, led by economic diversification, decarbonisation initiatives, and a commitment to innovation and technological advancement.