RIYADH: Private equity deals in the Middle East and North Africa region totaled $27.6 billion between 2020 and 2024, with a compound annual growth rate of 14 percent, driven largely by Saudi Arabia and the UAE, according to a new report.
While the UAE dominated deal activity from 2020 to 2022, Saudi Arabia overtook it in 2023, accounting for 41 percent of total transactions that year.
In its inaugural MENA PE 5-Year Report, venture data platform MAGNiTT highlighted that this shift underscores Saudi Arabia’s growing attractiveness to investors, supported by Vision 2030 initiatives and increased sovereign wealth fund participation.
Saudi Arabia and the UAE accounted for 68 percent of total PE transactions in MENA from 2020 to 2024, with the former securing 31 percent and the latter 37 percent.
In terms of disclosed deal value, the UAE led with $13.5 billion, followed by Saudi Arabia at $11 billion. However, in 2024, Saudi Arabia contributed more than half of the region’s total disclosed PE investment value.
The Kingdom’s share of deal count rose from 20 percent in 2020 to 41 percent in 2023, reflecting a compound annual growth rate of 67 percent.
Egypt also played a key role in the region’s PE market, accounting for 9 percent of deal volume over the five-year period, with transactions totaling $2.5 billion. In 2024, Egypt held a 12 percent share of total disclosed PE investment value.
Meanwhile, investment in other MENA markets increased from 17 percent in 2021 to 22 percent in 2024, indicating rising interest in frontier markets beyond the UAE, Saudi Arabia, and Egypt.
PE activity
The report highlights the volatility of MENA’s PE market, where deal volume peaked at 97 transactions in 2022 before declining in 2023 and 2024.
In 2024, the number of deals dropped 24 percent year-on-year, reflecting a recalibration of investor strategies amid tightening credit conditions, rising interest rates, and the disappearance of leveraged buyouts.
Unlike global PE markets, which rebounded in 2024 with a 12 percent increase in deal volume and a 22 percent rise in deal value, MENA investors remained cautious, favoring strategic growth investments over debt-heavy transactions.
Investment types and trends
MENA’s private equity landscape has shifted significantly over the past five years.
In 2020, buyouts dominated 56 percent of transactions, but by 2024, their share had dropped to 29 percent, while PE growth deals surged to 71 percent.
By the end of 2024, investment value was nearly evenly split between PE growth at 51 percent and buyouts at 49 percent, reflecting a shift toward scaling businesses rather than outright acquisitions.
Most deals in the region fell below the $50 million mark in transaction size, while deals exceeding $1 billion captured the largest share of disclosed value.
Large-scale deals peaked at 77 percent of total PE value in 2023 before contracting to 47 percent in 2024, signaling investor caution regarding high-stakes acquisitions amid tighter financial conditions.
Leveraged buyouts, which had sporadic activity in 2021-2022, disappeared entirely in 2023 and 2024, reflecting weaker investor appetite for debt-heavy transactions.
Sector analysis
Healthcare led in deal count, with 64 transactions over five years, accounting for 18 percent of total PE deals.
Finance attracted the highest disclosed deal value, totaling $7.5 billion — 82 percent more than the manufacturing sector.
Telecom was another key sector, capturing 47 percent of MENA’s total PE value in 2024, underscoring a growing focus on digital infrastructure.
Other notable sectors included IT solutions, transport and logistics, sports and fitness, sustainability, and energy.
Activity breakdown
Sovereign wealth funds and institutional investors played a crucial role in shaping MENA’s private equity landscape.
The most significant transactions involved capital-intensive and scalable sectors, with Saudi Arabia’s Public Investment Fund and Abu Dhabi’s ADQ leading mega-deal activity.
Future outlook
MENA’s PE market is expected to recalibrate, with investors focusing on mid-market growth opportunities and sector-specific plays.
The anticipated return of global buyout activity and potential interest rate reductions could revive leveraged transactions in the region, though caution is likely to persist.
The continued involvement of sovereign wealth funds, particularly PIF and ADQ, will be instrumental in driving future deal flow.
Despite the sharp decline in PE investment in 2024, the region’s ongoing economic reforms, diversification strategies, and digital transformation initiatives position MENA for long-term private equity growth.
VC vs. PE
The report also highlights key differences between private equity and venture capital, emphasizing their distinct investment strategies.
While PE focuses on acquiring majority stakes in established enterprises to drive growth and prepare for exit, VC primarily involves minority investments in early to mid-stage startups, particularly in the technology sector.
PE investments typically target mid-stage to mature companies across various industries, with a moderate risk level. In contrast, VC investments carry higher risk, as they depend on the success of emerging businesses.
Financially, PE transactions involve controlling stakes of 51 percent or more, often reaching full ownership, with investment sums ranging from $100 million to $10 billion.
These deals typically combine equity and debt, with an expected exit timeline of six to ten years and an internal rate of return exceeding 15 percent.
VC investments, on the other hand, are generally below $10 million, consist solely of equity, and target minority stakes of less than 50 percent. VC investors anticipate exits within four to seven years and seek returns exceeding ten times their initial investment.
