Markaz: Kuwait targeted in 4 out of the top 5 GCC M&A transactions in Q3 2018

21/10/2018

Kuwaiti companies have been targeted in 4 of the top 5 GCC M&A transactions during Q3 2018 as per a report recently issued by Kuwait Financial Centre “Markaz”. The top reported deal value during Q3 2018 was $491 million and involved United Energy Group reaching an agreement to acquire 100% of Kuwait Energy.

India’s Shree Cement acquired 93% of UAE’s Union Cement for a total of $305 million in an effort to expand its footprint in the GCC. Humansoft’s major shareholder, Fahad Al Othman, has exited an additional 17% of his stake in the company for a total of $226 million, leaving his remaining stake in the company to amount to 20%. KAMCO has completed its acquisition of 70% of Global Investment House for a total of $157 million. The stake was acquired from NCH Ventures, which represents the creditor’s group holding. NBK Capital was announced to have acquired a 56% stake in Kuwait-based online platform, 4SALE, for a total of $100 million. It is worth noting that Q8Car acquired 4SALE in 2013 for $1 million.

GCC M&A Growth

According to Markaz’s report, the number of closed M&A transactions in the GCC during Q3 2018 were the same compared to Q3 2017, and 26% lower compared to Q2 2018. Among the region, transactions in Bahrain witnessed the highest growth while Saudi Arabia reported the sharpest decline in the number of transactions during the same period. There were no closed transactions involving Qatari targets during Q3 2018.

Acquirers and Targets

According to the report, GCC acquirers accounted for 69% of the total closed transactions while Foreign acquirers accounted for 24% of the total number of transactions during Q3 2018. Buyer information was not available for 7% of the transactions during the same period.

Markaz noted that each of the GCC acquirers seemed to have a different appetite with regards to M&A transactions during Q3 2018. Kuwaiti acquirers preferred investing in their home country. Saudi acquirers mostly invested in the GCC region. UAE, Qatari, and Bahraini acquirers preferred investing outside the GCC. Omani acquirers didn’t engage in any transactions either within or outside the GCC during Q3 2018.

Foreign Buyers

Q3 2018 witnessed a 13% decline in the number of completed transactions by foreign buyers compared to Q3 2017.  In comparison to Q2 2018, the number of such transactions decreased by 36%.

UAE targets represented 100% of the closed transactions by foreign acquirers during Q3 2018, similar to the same period in 2017. Saudi Arabia was the only country other than the UAE that seemed to attract foreign acquirers during Q2 2018. 

Sectorial View

The Financials and Information Technology sectors witnessed the highest number of transactions, accounting for 42% of the total transactions. The Healthcare, Media, and Utilities sectors each accounted for 3% of the total number of transactions during Q3 2018.

Deals Pipeline

There was a total of 11 announced transactions in the pipeline during Q3 2018, representing a 35% decrease in the number of announced transactions compared to Q2 2018.

UAE, Kuwait and Qatar collectively accounted for 82% of the announced transactions during Q3 2018. Bahrain and Saudi Arabia made up 18% of the announced transactions.