Markaz: DP World’s acquisition of Topaz Energy and Marine leads the top GCC M&A transactions during Q3 2019


UAE’s industrial sector leads the top GCC M&A transactions during Q3 2019 as per a report recently issued by the Investment Banking Department at Kuwait Financial Centre “Markaz”. The top reported deal within Q3 2019 was completed by DP World as they acquired 100% of Topaz Energy and Marine from Renaissance Services and Standard Chartered Private Equity (recently bought out by Affirma Capital) for a total value of $1.1 billion.

The remaining top transactions were split evenly between Kuwaiti and Saudi targets. Among the transactions involving Saudi targets was Saudi Aramco’s acquisition of a 50% stake in Saudi Aramco Shell Refinery Company, a joint venture it created in collaboration with Royal Dutch Shell. Aramco purchased the remaining stake for $631 million and as a result, became the sole owner of the refinery company. The second transaction that closed in Saudi Arabia was undertaken by Fawaz Abdulaziz Al Hokair & Co. as it acquired 100% of Innovative Union Company for $91 million. In terms of the transactions involving Kuwaiti targets, Al Ghanim Trading’s acquisition of Kuwait Investment Authority’s 16% stake in Gulf Bank for $504 million, was the largest amongst the top transactions involving a Kuwaiti target company. The second largest transaction involving a Kuwaiti target company was Qurain Petrochemical Industries’ acquisition of a 60% stake in Jassim Transport and Stevedoring for a total of $138 million.

GCC M&A Growth

According to Markaz’ report, the number of closed M&A transactions in the GCC during Q3 2019 increased by 3% compared to Q3 2018. Among the region, Kuwait reported the highest increase in the number of closed transactions in Q3 2019 compared to Q2 2019, while Saudi Arabia recorded the highest increase compared to the same period in the previous year.

Acquirers and Targets

A majority of the transactions completed during Q3 2019 and Q2 2019 were carried out by GCC acquirers. Of the total number of transactions closed during Q3 2019, GCC acquirers accounted for 67% while foreign acquirers accounted for 30%. The remaining 3% represents transactions for which the buyer information was not available. The market witnessed a similar pattern during the previous quarter in Q2 2019 as GCC acquirers accounted for 77% of the total number of closed transactions while foreign acquirers accounted for the remaining 23%.

Each of the GCC markets seemed to have a different appetite with regards to M&A transactions during Q3 2019. Kuwaiti and Saudi acquirers predominantly targeted companies within their home countries. UAE acquirers mostly invested outside of the GCC, with a slightly lower exposure to targets in their home country. Omani acquirers did not complete a transaction within or outside the GCC during Q3 2019, while Qatari and Bahraini acquirers each closed only one transaction during the same period.

Foreign Buyers

During Q3 2019, the market witnessed a growth of 29% in the number of transactions completed by foreign buyers compared to Q2 2019 as well as Q3 2018. In the past, foreign buyers have typically acquired companies within the UAE as is demonstrated by the number of transactions completed within the UAE relative to other countries in the GCC overtime. This trend persisted throughout this quarter as the majority of the transactions completed targeted companies in the UAE (~78%). The remaining transactions involved Qatari and Saudi targets, each of whom represented 11% of the total transactions completed. After a year of no activity, Qatar has recently attracted foreign investors while Kuwait, Bahrain and Oman recorded no activity for this quarter.

Sectorial View

The sectors that witnessed the highest level of activity during Q3 2019 were the Financials, Industrials, Consumer Discretionary and Information Technology sectors. Collectively, these sectors accounted for 60% of the total number transactions closed.

The Financials sector recorded the greatest increase in the level of activity relative to the previous quarter. In addition, there was no activity within the Consumer Discretionary sector during the last quarter; however, it is one of the sectors that observed a high level of activity during Q3 2019.

Deals Pipeline

By the end of Q3 2019, there was a total of 12 announced transactions in the pipeline, which translates into a 45% decline in activity relative to the Q2 2019. Roughly, 60% of the transactions completed this quarter involve targets from the UAE while the remaining 40% is attributable to activity within Saudi Arabia and Kuwait.