The Middle East's dealmaking landscape is set for a surge in 2024, fuelled by heightened investor interest and a focus on economic diversification and decarbonisation, according to PwC's latest TransAct report titled "Strategic growth beyond oil: Economic diversification and decarbonisation expected to boost deal making in the region." Despite global economic headwinds, the report highlights the Middle East's resilience thanks to strong economic fundamentals and supportive government policies. This stability has fostered investor confidence, leading to a relatively active deal market compared to other regions. The report attributes the region's buoyancy to factors like digital transformation initiatives, non-oil sector development, and energy transition projects. Businesses, seeking a competitive edge, can leverage mergers and acquisitions (M&A), divestments, joint ventures, and refinancing to accelerate growth, acquire new capabilities, or solidify their market positions. "The Middle East's M&A market has shown remarkable resilience, boosting investor confidence and leading to increased dealmaking activity," said Romil Radia, Regional Deals Clients & Markets Leader at PwC Middle East. "We anticipate 2024 to be a year of significant growth, driven by economic diversification, decarbonisation efforts, and a focus on localisation and value creation, as companies transform and expand their capabilities." The report also delves into the resilience of Saudi Arabia's dealmaking scene, fueled by the nation's unwavering commitment to its development agenda. This commitment has translated into a surge of activity in non-oil sectors like infrastructure, manufacturing, and clean technology. Notably, Saudi Arabia witnessed less pronounced declines in deal volume compared to 2022, with robust IPO activity further bolstering the outlook. "We expect this positive momentum to continue," said Imad Matar, Transaction Services Leader at PwC Middle East. "Government initiatives like asset privatisation and encouraging private sector listings will attract investments, drive reforms, and lessen reliance on fossil fuels." The report identifies net-zero targets and the energy transition as catalysts for new funding opportunities in critical infrastructure and clean technologies like hydrogen, wind, solar, and carbon capture. This, coupled with growing investor appetite for clean energy, paints a promising picture for the sector. Technology, encompassing areas like cybersecurity, cloud computing, and e-commerce, is another sector with immense potential for dealmaking growth in 2024. The Middle East's fervent embrace of the digital revolution, with countries like Saudi Arabia, UAE, Qatar, and Bahrain actively integrating advanced technologies like artificial intelligence, further propels this trend. PwC Middle East experts emphasize the importance of attracting and retaining talent through proactive skill development and education initiatives to equip the workforce for the evolving business environment. Businesses and wealth funds must remain adaptable and leverage dealmaking strategically to navigate market developments, with a focus on technology, innovation, infrastructure, and renewable energy sectors to maintain their competitive edge.
