GCC countries attracted $4.57 billion investment

Manama : The Gulf Cooperation Council (GCC) countries attracted a combined investment of US$4.57 billion during the first quarter of 2016, thereby contributing significantly to the regional Mergers & Acquisitions (M&A) deals, revealed a top expert. 

“Countries within the GCC significantly contributed to regional M&A deals with 65 per cent of total Middle East and North Africa (MENA) deal making for the first quarter of 2016 was attributable to GCC countries,” said Ramachandran Narayanan, Partner and Head of Deal Advisory at KPMG Middle East and South Asia (MESA). 

While commenting on the latest edition of KPMG’s International Global M&A Predictor, he also said that the region attracted combined investment of US$4.57bn across 64 transactions, of which 23 had UAE targets while Saudi Arabia and Kuwait had 15 each, Oman had seven and Qatar and Bahrain had two each. According to the KPMG’s International Global M&A Predictor, the world’s largest businesses are expected to show an increasing appetite for M&A transactions during the remainder of 2016. The appetite to do deals is predicted to rise by 4pc over the next months. The capacity of corporates to fund M&A growth, meanwhile, is expected to rise by 13pc over the same period. 

The report, however, also warns that with the Chinese economy cooling down, the US starting to raise interest rates and oil prices depressing the economies of oil exporting countries, uncertainty has increased significantly going into 2016.  “We expect strong transactional activity in many western economies in 2016 with healthy balance sheets, profit levels and strong liquidity in the debt markets among the highlights,” said Leif Zierz, KPMG International Global Head of Deal Advisory

Sector strengths

Energy is expected to see the highest increase in M&A appetite during 2016, at 23pc. Basic materials are at 12pc and Consumer staples at 6pc. In terms of capacity, Technology is the star performer, with an expected increase of 90pc, as tech companies continue to increase their cash stockpiles. 

Deal outstrips completions

The total value of all announced transactions worldwide climbed by 31pc in value from US$2,828 billion to US$3,709bn. This diverges significantly from the total value of all completed transactions worldwide, which declined by 40pc during 2015.