Expert Spotlight: Key M&A trends in the Middle East & Turkey for 2022

By Suzy Bibko, Content Marketing Manager, EMEA

At our recent webinar, in partnership with Mergermarket, experts reviewed the current landscape of the Middle East and Turkey M&A market and looked at current trends and emerging opportunities for 2022.

Market overview and strategies

John Komninakidis, Vice President, Sales-Middle East, Turkey, Greece, Datasite, cited the strong revival in M&A activity in the Middle East, thanks to government agendas, such as Saudi Arabia's and Abu Dhabi's Vision 2030. He says this is “why we noticed increased investment in technology assets and momentum in the capital markets.” M&A activity was focused mainly in the UAE, followed by Egypt and then Saudi Arabia. With regards to Turkey, M&A activity has continued to build momentum.

In terms of foreign investor appetite, often a key concern in Turkey, he felt that foreign investors have maintained their confidence in Turkey’s market, contributing to 58% of the value.

Eren Kurşun, Partner, Esin Attorney Partnership, pointed out that Turkey’s difficult position due to its strong economic ties with both Russia and Ukraine. He stated that shortages in food and energy and/or significant price increases will have far-reaching consequences on other sectors, potentially driving dissatisfied sales.

Another challenge is the difficulty with currency fluctuations in Turkey. However, “it doesn't stop the strategic investors from investing but it has more impact on the financial investors.”

Kurşun also discussed how Turkey has had many elections and noted that this affects the stock market. In general, most people are unsure of the outcome of these elections and are adopting a ‘wait and see' approach. However, he predicts that once the elections are over in 2023, the market will be perceived in a positive way.

The golden age of IPOs

As far as the GCC M&A Market is concerned, Abhishek Sharma, CEO, Foundation Holdings, a firm that specializes in healthcare and education investing, said: “We've entered the golden age of IPOs.”

He explained: “The reason IPOs [have] become important, it gives companies [and] governments firepower, often for the capital to then engage again in deal activity.” Moreover, the IPO Golden Age is “helping unlock a whole generation of companies, which historically have not had capital, but you're going to see them now move from a local champion to really a national champion…[an] exciting time.”

Sharma also said that venture capital is enjoying “a golden age” in the Middle East, with deal activities up by 400%.

Digital and ESG trends

Komninakidis believes that dealmakers need technology to speed up the due diligence/execution process: “We need to run the due diligence processes fast. And this is only one part of the equation…. You need to know to get some insight about the investors’ appetite. You need to talk about security.”

Meanwhile, Sharma highlighted how “COVID really came and changed [the healthcare industry] and that exposure to digital healthcare became a must-have industry.” However, he points out that digital healthcare is “extremely fragmented. There is no market leader as such…it's early days.”

According to Kurşun, “M&A targets are becoming more and more digital…healthcare, digital healthcare, e-commerce, finance, fintech, everything.” He also points out how data rooms are virtual now.

There is a new focus on industries such as gaming and e-commerce, with Turkey becoming “a hub of gaming companies,” according to Kurşun. He said this shift is getting Turkey onto “the radar of foreign investors.”

And ESG? “It's really important….There's a huge bonus on your side in terms of first valuation and second, the durability of the deal,” said Kurşun.

However, it’s still early days. Sharma said, “I believe even the leading firms are still figuring out where to play, how to win…capturing the true value of ESG really requires embedding it in the full entirety [of the] value chain.”

To hear more from the experts on M&A in the Middle East and Turkey, watch the webinar replay.