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Tuesday, 7 September 2021

Egypt has been one of the Middle East’s M&A hotspots so far in 2021

Egypt saw a strong pickup in M&A activity during the first six months of the year, becoming one of the most popular countries in the region as the economy continued to rebound from last year’s covid shock, Baker McKenzie (pdf) said yesterday. Egypt saw 18 transactions worth USD 1.8 bn during the six-month period, figures published by the law firm show, making it the most popular country in the region for M&A by value and the second by transaction count. Firms based in Egypt were the third most-active in cross-border M&A in our region, with eight reported during the period.

Investors from the US (21 transactions) and the UK (nine) were the most active sources of inbound investment into the region, followed by Egypt (eight transactions). Inbound M&A activity was dominated by the energy and power, consumer products and service, financial and high-tech industries, the report said.

For outbound transactions from the Middle East into other regions: Egyptian investors pulled the trigger on 18 transactions, followed by the UK with 11 M&As worth USD 1.7 bn. The US knocked both of them out of the top spot for volume, with 22 transactions during the first half of the year. Outbound activity was dominated by regional investors, with energy and power, retail, and tech proving the most attractive sectors.

The appetite for tech companies in MENA will continue to grow in the months ahead, Baker McKenzie’s Osama Audi said, predicting a “sustained increase” in regional and out-bound tech M&As.

What’s driving the surge? Ultra-low interest rates, increasing appetite for risk and tns of USD sloshing around private equity groups are all driving the swell in activity.

Global dealmaking has surged this year, putting 2021 on course to smash records, as we reported yesterday morning, citing a Financial Times report based on data from citing Refinitiv. Almost USD 4 tn of transactions were agreed in the first eight months of the year, with USD 500 bn coming in August alone, the Financial Times reported earlier this week,.

But Baker McKenzie’s regional figures show a slightly different story, suggesting by its math that total regional transaction values actually fell slightly this year, reaching USD 40.3 bn from USD 43.5 bn in 1H2020, despite the number of transactions rising by almost 60% to 307.

Several big-ticket tech transactions have occurred in the region in recent months: Egyptian transport company Swvl agreed to a USD 345 mn SPAC merger in July that values it around USD 1.5 bn and paves the way for an IPO on the Nasdaq next quarter. Music streaming service Anghami will also list on the Nasdaq after agreeing a similar SPAC merger in March, while cloud kitchen platform Kitopi closed a huge USD 415 mn series C funding round led by SoftBank in July.

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