M&A activity in the MENA utility sector hit USD 845 mn in 2Q2017, up 6x q-o-q, according to the EY Power transactions and trends report covered by CPI Financial. “The Middle East and Africa continue to offer opportunities for investors looking to diversify their portfolio. As low-risk, high-value projects dry up in developed countries, investors are starting to move into higher-risk regions where they can expect less competition and higher returns,” David Lloyd, EY’s Middle East Power and Utilities Transactions Leader, said. Egypt and Saudi Arabia are expected to remain hot spots for investments regardless of the region’s political and economic constraints.

Egypt is attracting investments in solar power with USD 500 mn in funding coming in from the EBRD and an agreement with Scatec Solar to build a 400 MW solar power plant. Lloyd says “with sustained [transaction] activity in conventional generation still subdued, P&U transactions are taking on more unpredictable characteristics. Quarterly reports of transactional activity are dominated by the anticipation of asset sales flowing from privatisation related structuring and market reform combined with a steady undercurrent of smaller renewables and new energy [agreements]. The continuing low interest rate environment and a surplus of global capital against available opportunities provide a favourable environment and outlook for P&U assets.”