Mergers, acquisitions reshaping GCC’s overall business landscape

Setting appropriate key performance indicators to achieve synergies and targets, integrating teams, and developing a clear longer-term plan are all critical in setting up a deal for success in the region. (SPA)
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Updated 13 January 2024

Mergers, acquisitions reshaping GCC’s overall business landscape

  • Rise in activity comes as region shifts focus on implementation of comprehensive renewable energy programs

RIYADH: Of late, businesses in the Gulf Cooperation Council region have become more inclined toward pooling their resources to achieve operational efficiency and maximize profits.

The trend of mergers and acquisitions in the GCC is expected to rise, said Moody’s in March 2023. Nearly one year on, the global rating agency’s prediction seems to be spot-on.

M&As are business transactions in which the ownership of firms, business organizations, or their operating units are transferred to or consolidated with another firm or business organization.

Several factors can make such transactions successful in today’s world such as synergies, trust, and integration, according to Andrew Nichol, partner at Lumina Capital Advisers.

“Synergies are unlikely to deliver the desired outcomes of selling and buying shareholders without a clear plan on how a merged entity creates more significant value than their individual parts,” Nichol told Arab News.

He added: “Trust because ultimately, deals are done between people. Be they the shareholders, management teams, or employees, it is critical that communication throughout the process remains open, transparent, and oriented toward achieving the objectives set out in the original deal thesis.”

Finally, about the integration aspect, Nichol noted: “Integration, because M&A does not stop once the legal agreements are signed.”

Additionally, setting appropriate key performance indicators to achieve synergies and targets, integrating teams, and developing a clear longer-term plan are all critical in setting up a deal for success, he reiterated.

The year 2023 saw a real shift in terms of “who” has been transacting into and out of the region, Nichol said. 

“In H1, we saw larger deals, typically led by SWFs (sovereign wealth funds) — SAVVY Gaming/PIF/Scopely, KSA; Blackstone/ADIA/Cvent Holding, UAE,” Nichol underlined.

“As the year progressed, we also saw an increase in private sector-led deals, as well as a resurgence in private equity activity,” he added.

Nichol continued: “In November, STS, a leading digital transformation solutions provider across Saudi Arabia, the UAE, and the wider GCC announced its acquisition by ZainTECH.”

ZainTECH is a UAE-based top-tier managed security services provider that aims to help enterprises protect against, detect expediently, and respond effectively to cybersecurity threats.

According to Nichol, this specific M&A stood out in 2023 amid all other similar transactions in the region.

“The STS/ZainTECH transaction, which we advised on, stood out due to its highly strategic nature for both companies,” he disclosed.

“A buyer, seeking to extend and amplify its services offering, access top talent, and expand the geographies it serves, with a vendor recognizing the opportunity of partnering with a pioneering regional digital solutions provider,” Nichol explained.

Moving on, he also shed light on projections on the nature of M&As to expect in the region in 2024.

“In 2023, the region cemented its position as a net exporter of innovation due to the regional giga-projects, digital transformation efforts, and the implementation of artificial intelligence. This will continue into 2024,” Nichol said. This comes as the region has shifted from talking about energy transition to becoming a global leader in implementing some of the world’s most comprehensive and diverse renewable energy programs, according to him.

“In 2024, we will see more deals in the region as global firms continue to grow/seek access to regional projects,” Nichol projected.

He added: “We expect growth across energy transition, healthcare, travel and tourism as well as gaming, engineering and project management and digital transformation sectors.”

Highlighting the same subject, Ali Anwar, managing director of Alvarez & Marsal Global Transaction Advisory Group in the Middle East, said in a recent report: “Investors have experienced a challenging year in 2023 when M&A activity was hit by concerns about the macroeconomic environment and the impact of higher interest rates.”

He added: “While those challenges haven’t fully abated, 2024 holds the potential for dealmaking to show some improvement.” 

In 2024, we will see more deals in the region as global firms continue to grow/seek access to regional projects.

Andrew Nichol, Partner at Lumina Capital Advisers

One major positive for the M&A market heading into 2024 is receding uncertainty about the trajectory of interest rates, the top executive underlined.

Anwar went on to shed light on the fact that market participants are seen being more confident than they have been in several months and that there seems to be a promising inversion of the curve since the end of summer.

He stated: “We are seeing more sell-side activity and, therefore, expect deal opportunities to launch in early 2024.”

Rise in cross-border activities

In 2023, cross-border deals formed the majority of closed deals, Nichol revealed.

Cross-border activities refer to any transfer of property, goods, or services between individuals or business entities who reside in different jurisdictions.

“In our September 2023 cross-border deals survey, 70 percent of respondents had recently or planned to close a cross-border deal within the next 18 months. This was double the levels of our previous survey,” Nichol highlighted.

He added: “Deals in the region are today driven by the desire to create regional champions through consolidation in key sectors such as construction, health care, and infrastructure services, in conjunction with transactions centered around international interest in joint ventures and partnering to deliver skills and technologies for complex megaprojects in AI, digital transformation and advanced manufacturing.”

Talking about expectations in 2024, Nichol clarified that it is projected to be another bumper year for cross-border Middle East transactions.

This comes as private equity — both direct and secondary — has become the fastest-growing asset class in the region, and this trend will continue into 2024, Nichol said.

“With regional funds being raised from domestic, international, and SWF participants, we predict the volume of PE deals will rise,” he explained.

Likely spike in FDIs

The year 2022 was a record year for foreign direct investments in the GCC region, particularly Saudi Arabia and the UAE, exceeding previous 2012 highs, Nichol said.

“While we are still awaiting full-year 2023 FDI numbers, we predict that Saudi Arabia’s FDI will have exceeded the UAE’s, and both countries will see double-digit year-on-year FDI growth,” Nichol underscored.

 FDI is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy.

As for 2024’s pipeline in terms of FDIs, it is projected to be somewhat robust.

“FDI flow growth rate has been diminishing in 2023; however, long-awaited public-private partnership projects are in the pipeline, especially in healthcare, transportation, logistics, and sports,” Razeen Capital CEO Mohammed Al-Suwayed told Arab News.

Razeen Capital is a financial securities consultancy firm that Al-Suwayed founded in January 2021.

“So we’re most likely to see a spike in the FDI growth rate this year and the years after,” Al-Suwayed projected.

That being said, it is clear that the GCC region is on track to experience a bright future ahead in terms of M&As as well as cross-border activities and FDIs.

Consequently, this will most likely help offset the rising operating expenses and boost cost-efficiency further in the region.

New SAMA platform Naqd to facilitate easier account access for agencies 

Updated 14 July 2024

New SAMA platform Naqd to facilitate easier account access for agencies 

RIYADH: A new digital platform will allow government agencies to access their accounts in the Saudi Central Bank easily and conveniently. 

The central bank, also known as SAMA, has announced the launch of Naqd, a platform for government banking services. The service is designed to provide government entities with easy and secure access to their accounts at the central bank and to conduct financial transactions through a trusted digital platform. 

The initiative is part of SAMA’s strategy to offer banking outlets to government entities and support digital transformation. 

The central bank is fostering digitalization across the spectrum with the launch of several initiatives. 

In May, SAMA announced the launch of a new undertaking — “View My Bank Accounts” — for individual bank account holders. The service enhances reliability and reduces the risk of suspicious transactions, unauthorized account use, and impersonation.  

The Naqd platform aims to digitize financial transaction services for government entities, providing a unified and secure platform. 

It facilitates round-the-clock access to account information, account management and real-time monitoring of transactions conducted from and to government accounts. 

The platform is intended to deliver electronic banking services that support government financial transactions, enhance user experience, and increase efficiency and productivity in financial dealings using the latest technologies.

Additionally, it aims to reduce the time required to execute government banking procedures. 

Saudi environment minister launches financial support program to propel fisheries sector

Updated 14 July 2024

Saudi environment minister launches financial support program to propel fisheries sector

RIYADH: Saudi Arabia’s fisheries sector is set to receive a boost thanks to a new direct financial support program launched by the Kingdom’s minister of environment, water and agriculture.

Abdulrahman Al-Fadhli will oversee the financial support for the Reef Saudi program, which aims to open new horizons for the development of the fisheries sector and stimulate the industry, according to a statement. 

The Sustainable Agricultural Rural Development Program, or Reef Saudi, seeks to improve the rural agricultural sector to raise the standard of living of small farmers and rural families, increase efficiency and productivity, and improve lifestyle and food security.

This move falls in line with the objectives of the Kingdom’s Vision 2030, as the program is an important step toward achieving several strategic goals, including strengthening the nation’s local economy.  

It also aligns well with Saudi Arabia’s Ministry of Environment, Water, and Agriculture’s continuous efforts over the past years to boost the fisheries sector, including establishing a national program to protect fish stocks and the industry as a whole, the provision of concessional loans to assist small-scale fishermen with the purchase of boats, and initiatives to modernize ports in the Red Sea and Arabian Gulf.

Moreover, the program requires that fisherman wishing to obtain support must have a fishing license, in either the Saudi artisan category or Saudi sailor category. 

The fisherman should also not be an employee in the public or private sector, be no younger than 18 years old, and be based within the Kingdom during the period, in addition to the duration of each fishing trip being no less than six hours.

Earlier this month, Saudi Arabia highlighted its role in leading and unifying international efforts to develop the fisheries sector during its presidency of a special UN committee dedicated to the industry. 

This came during the conclusion of the 36th session of the body, which was held at the headquarters of the Food and Agriculture Organization in Rome and was chaired by the Kingdom’s permanent representative to the FAO, Mohammed Al-Ghamdi.

During the meeting, Saudi Arabia reviewed its most prominent efforts to promote and develop the fisheries sector and achieve its sustainability during its two-year presidency, the Saudi Press Agency reported at the time.

Closing Bell: Saudi main index rose to close at 11,881

Updated 14 July 2024

Closing Bell: Saudi main index rose to close at 11,881

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Sunday, gaining 89.14 points, or 0.76 percent, to close at 11,881.55.

The total trading turnover of the benchmark index was SR6.36 billion ($1.69 billion) as 154 of the stocks advanced, while 68 retreated.  

On the other hand, the Kingdom’s parallel market Nomu slipped 79.18 points, or 0.31 percent, to close at 25,696.86. This comes as 34 of the listed stocks advanced while 36 retreated. 

Meanwhile, the MSCI Tadawul Index gained 15.65 points, or 1.06 percent, to close at 1 1,488.02.

The best-performing stock of the day was Miahona Co. The company’s share price surged 9.96 percent to SR37.00.

Other top performers include MBC Group Co. as well as Al Taiseer Group Talco Industrial Co.

The worst performer was Al-Rajhi Co. for Cooperative Insurance, whose share price dropped by 7.27 percent to SR209.20. 

Other worst performers were Saudi Advanced Industries Co. as well as Arabian Pipes Co.

On the announcements front, ADES Holding Co. has announced that it has amended its existing syndicated facility, securing an additional equivalent to $3 billion, with the majority of existing lenders participating along with new, leading local and regional financial institutions.

According to a Tadawul statement, the new upsized financing is divided into the equivalent of a $2.7 billion standby term tranche to finance the group’s expansion plans and an additional $300 million revolving credit facility tranche to be applied toward the general corporate purposes of the company.

While the financing duration of the standby term tranche is eight and a half years, with a final maturity in December 2032, that of the RCF tranche is eight years, with a final maturity in June 2032. 

The financing entities include Saudi Awwal Bank, Riyadh Bank, Al Rajhi Banking and Investment Corp., and Arab National Bank, as well as the Saudi National Bank, Alinma Bank, Banque Saudi Fransi, and Aljazira Bank. Arab Petroleum Investments Corp. and Commercial Bank of Dubai PSC are also included.

The bourse filing also revealed that the guarantees offered for the financing entail mortgages over offshore rigs, share mortgages or pledges over entities that hold onshore or offshore rigs as applicable, and security over the collection accounts and debt service accrual account. 

They also include assignment of receivables under client contracts, assignment of receivables under insurance contracts in respect of financed rigs as well as promissory notes.

Saudi Arabia and Thailand strengthen economic ties with new investment office in Riyadh

Updated 14 July 2024

Saudi Arabia and Thailand strengthen economic ties with new investment office in Riyadh

RIYADH: Saudi Arabia is set to enhance private sector cooperation with Thailand as the Southeast Asian nation opens its first Board of Investment office in Riyadh, a top official announced. 

On the sidelines of a business forum in the Saudi capital, Minister of Investment Khalid Al-Falih highlighted that this marks Thailand’s inaugural office in the Middle East, encouraging stronger bonds and new investment opportunities in both countries. 

This came as the minister lauded the steady trade relations, that saw business soar to $8.8 billion in 2023, up from $7.5 billion following the nations’ restored ties in 2022. This represents nearly 22 percent of Thailand’s total trade with the Middle East, underscoring a flourishing economic partnership. 



Addressing the business delegation at the Saudi-Thailand Investment Forum, Al-Falih said: “Representative offices from the Kingdom of Saudi Arabia and your country will do a great deal of facilitating private sector to private sector cooperation and allowing us to reach the potential that I mentioned.”  

He added: “I believe it will continue to grow at double digits as it has been the last couple of years. In investment, we’ve also seen growth, although from very small numbers, with FDI (foreign direct investment) stock doubling since 2019 in the Kingdom of Saudi Arabia.”  

The minister added that travel and tourism are returning to previous levels, with close to 200,000 tourists and visitors traveling from Saudi Arabia to Thailand. He also noted that over 30,000 Thai visitors had come to the Kingdom the previous year to experience Saudi Arabia. 

The Thailand BOI office will cover a total of 13 countries in the Middle East, including Bahrain, Qatar, Kuwait, Turkiye, and the UAE. 

The Riyadh headquarters is Thailand BOI’s 17th overseas office, with two additional locations in China and Singapore set to be added soon.  

“We hope investors from Saudi Arabia and the Middle East will consider making Thailand an investment base to expand business in ASEAN (Association of Southeast Asian Nations) and take advantage of Thailand’s membership in the RCEP (Regional Comprehensive Economic Partnership) agreement, the world’s largest free trade area,” said Narit Therdsteerasukdi, secretary-general of the Thailand BOI. 

He added: “We believe there is a strong potential for investment and cooperation in several key sectors, including agriculture, processed food, renewable energy, healthcare and medical services, as well as automotive, especially electric vehicles.” 

Additionally, Al-Falih explained that the Thailand BOI office will boost areas of cooperation between both countries in several areas. 

“Before I do that, let me assure you — and this is not just me, not our Ministry of Investment, not the government, but the entire Saudi Arabia — we are very bullish on Thailand and indeed very impressed with your achievements,” the minister said.  

He continued: “Your GDP (gross domestic product) per capita has tripled in 20 years, while your export structure has evolved significantly into increasingly sophisticated products in the same time frame.” 

Furthermore, the minister recognized Thailand as one of the founding members of ASEAN, a significant economic alliance that holds importance not only in Asia but globally. 

Due to Thailand’s strategic location and economic strength — the second-largest economy in ASEAN with a GDP exceeding half a trillion dollars — it is a crucial partner for Saudi Arabia.  

“Especially as you are bolstered by ASEAN free trade agreements with most major economies, as you outlined to me this morning. These agreements include big economies in East Asia, as well as South Asian economies. Of course, anchored by India,” Al-Faih said. 

The minister stressed common parallels between the two countries, noting they share a “great deal of complementarity.” Thailand has its National Strategy 2037, whereas Saudi Arabia has its Vision 2030. 

“Which naturally leads me to emphasize the energy sector, including its multifaceted branches downstream: biofuels, biochemicals and CCUS (carbon capture utilization and storage), hydrogen, and renewables,” he said. 

Al-Falih added: “This is obviously an area where we share common ambitions, and the Kingdom has unique capability, creating numerous investment opportunities for both countries in terms of supply chain products as well as project development.” 

Saudi Arabia’s demand for agricultural and food processing products is expected to reach over $130 billion by 2030, with a compound annual growth rate of 7.5 percent.  

Meanwhile, Thailand’s agricultural and food processing sectors were robust in 2022, with exports totaling $45 billion. 

“This presents a huge area of complementary that would boost trade and investment as well as enhance food security in both nations,” Al-Falih underscored. 

Moreover, during the event’s opening speech, Thailand’s Minister of Foreign Affairs, Maris Sangiampongsa, underscored the robust private sector collaboration between both countries, noting the success of the International Mega Fair organized by the Thai Chamber of Commerce in Saudi Arabia. 

This event featured over 30 Thai businesses showcasing 1,000 products from 200 brands, significantly boosting Thailand’s presence in Saudi Arabia. 

Looking ahead, Sangiampongsa announced the upcoming International Mega Fair 2024 in Riyadh, scheduled for November. This event aims to promote trade across diverse sectors, such as construction materials, hospitality, and defense technology. 

The minister expressed confidence in Thai investment representatives’ readiness to strengthen cooperation with their Saudi counterparts, building on the momentum of past successes.  

“As both our nations are located strategically at the crossroads of continents, we recognize that connectivity and efficiency are part and parcel of any feasible development strategy,” Sangiampongsa stated. 

He continued: “That is why, as part of our plan, Thailand launched our flagship Landbridge Project, which will connect the Gulf of Thailand with the Andaman Sea and the Indian Ocean. This bold initiative will reduce commuting time and costs by 15 percent.” 

The forum saw the signing of 11 memoranda of understanding between Thai and Saudi companies, covering cooperation in areas including energy, infrastructure, engineering, agriculture, and forestation. 

The event also featured bilateral meetings and discussions between private sector representatives, which reviewed developments in the investment environment in Saudi Arabia and Thailand. 

Additionally, Saudi Assistant Minister of Investment Ibrahim Al-Mubarak met with Therdsteerasukdi to discuss ways of cooperation and developments in the work of the Saudi-Thai Coordination Council. 

Further, a meeting was held between Saad Al-Khalb, CEO of Saudi EXIM, and Senior Executive Vice President of Export-Import Bank of Thailand Benjarong Suwankiri, discussing areas of cooperation aimed at enabling promising investment opportunities. 

In 2023, Thailand’s applications for investment promotion surged to a nine-year peak of 848.3 billion baht (approximately $24 billion), marking a 43 percent increase from the previous year. 

This growth was driven by significant foreign direct investments primarily in five key sectors outlined in the BOI’s new Investment Promotion Strategy: green industries, automotive (including electric vehicles), and semiconductors. Additionally, investments in advanced electronics, digital and creative industries, and international business centers contributed significantly.  

These sectors accounted for more than half of the total investment pledges. Leading sources of investment included China, Japan, Singapore, and the US. 

NWC initiates $150m in projects to enhance water services in Qassim region 

Updated 14 July 2024

NWC initiates $150m in projects to enhance water services in Qassim region 

RIYADH: Saudi Arabia’s Qassim region is set to see improvements in water services, with the National Water Co. initiating 14 projects valued at over SR561 million ($150 million). 

The state-owned firm announced that its Northern Cluster has initiated the implementation of water and environmental projects across various parts of the region. These initiatives aim to enhance water and wastewater services, improve their quality, and meet the growing demand. 

Saudi Arabia ranks among the world’s largest water consumers. With limited natural resources, the country continues to rely on the construction of desalination facilities to meet its increasing water demands. The Ministry of Environment, Water, and Agriculture has announced several investments in water projects scheduled for the coming years. 

These projects are part of its strategic goals to expand water and environmental services, meet growing demand, and enhance the quality of life and services for the population in line with the Kingdom's Vision 2030. 

The Public Investment Fund-owned company noted that the initiative includes seven projects worth about SR283 million. These include sewerage channels and networks totaling over 329,000 meters and the construction of a lifting station capable of handling 1,350 cubic meters per day. 

Additionally, the company outlined seven water projects valued at over SR278 million. These initiatives involve networks and pipelines spanning more than 833,000 meters and the establishment of a water distribution system for the Al-Mukharram and Umm Hazm well areas. 

On July 10, the company announced that its northern cluster had initiated 12 water and environmental projects across various parts of the Hail region, amounting to over SR531 million in total costs. 

Five of these projects, totaling about SR238 million, will focus on pipelines and networks spanning more than 226,000 meters, alongside the construction of a lifting station capable of handling over 3,900 m3 per day. 

Also, the NWC has commenced seven water projects aimed at supplying regional customers, involving the construction of reservoirs, water pipelines of various diameters, and water pumping stations, totaling more than SR293 million. 

The network lengths exceed 374,000 meters, complemented by 56 operational reservoirs with a combined capacity of 33,500 m3.  

The projects also include three pumping stations with a total capacity exceeding 53,600 m3 per day, along with multiple water tanker filling stations, as reported by the NWC.