Gulf Sovereign Wealth Funds Drive $36bn+ Mega-deal Boom As UAE, Saudi Buck Global M&A Slowdown

Strategic inbound and domestic M&A activity in the region surged 88 per cent year-on-year to reach $36 billion during the first 10 months of 2024, according to new research from Bain & Company, contrasting sharply with more modest global deal growth of 7 per cent.

“The Middle East’s exceptional M&A growth underscores the region’s transformation into a global investment powerhouse,” Grégory Garnier, Middle East Head of Bain’s Private Equity and Sovereign Wealth Fund practices, told Arabian Business.

“Sovereign wealth funds and leading regional players are not only driving domestic opportunities but also capitalising on international markets with strategic precision.”

The surge was particularly pronounced in key sectors throughout 2024, with energy and natural resources seeing a 140 per cent increase, technology investments rising 90 per cent, and advanced manufacturing services recording a remarkable 300 per cent growth compared to 2023.

Global M&A deal value reached $3.5 trillion in 2024 — up 15 per cent from 2023 — with the Middle East’s performance standing out for both its scale and strategic focus. Saudi Arabia’s Public Investment Fund (PIF) and UAE’s sovereign funds, including Mubadala and ADIA, were central to this growth.

Saudi Aramco’s $8.9 billion acquisition of Rabigh Refining & Petrochemical Co. exemplified the trend toward larger, transformative deals. This shift in deal structure, favouring fewer but larger transactions, signals a maturing market focused on strategic value rather than volume.

“The surge in high-value deals within energy, technology, and advanced manufacturing reflects a broader shift toward innovation and sustainability, positioning the Middle East as a key driver of global economic activity,” Garnier added.

Diverging strategies

Despite operating in similar sectors, Saudi and UAE sovereign funds have pursued markedly different investment strategies. Saudi entities have predominantly focused on domestic opportunities, aligning with Vision 2030’s economic diversification goals. In contrast, UAE funds have aggressively pursued international expansion, particularly in Europe, where investment value increased by over 100 per cent throughout 2024.

“While Saudi funds prioritise domestic sectors, with energy and manufacturing seeing exceptional growth rates, UAE’s strategy targets international markets with strategic precision,” Elif Koc, partner at Bain & Company’s Middle East office, told Arabian Business.

“This divergence is particularly evident in Europe-bound investments by UAE acquirers, contrasting with Saudi Arabia’s domestic-centered deals.”

The region’s relatively favourable regulatory environment has attracted increased attention from global investors, particularly as regulatory scrutiny has extended deal timelines in other markets. Nearly half of global dealmakers reported regulatory concerns impacting their deal considerations in 2024, according to Bain & Company.

Regulatory advantage

The Middle East’s comparative regulatory efficiency has become a significant advantage, with both Saudi Arabia and the UAE simplifying foreign ownership rules and enhancing transparency to facilitate cross-border transactions.

The region has also been quick to adopt new technologies in deal-making processes. Following global trends, where one in five M&A practitioners now use generative AI for sourcing, screening, and due diligence, Middle Eastern dealmakers have embraced these tools to streamline processes in an increasingly competitive market.

The sustainability of this growth trajectory in 2025 will likely depend on stable oil revenues and geopolitical conditions. However, the region’s strategic shift toward high-value deals in key sectors last year suggests a fundamental change in its role in global M&A markets.

“SWFs leverage faster due diligence cycles with local expertise, aided by internal capabilities to address sector-specific risks,” Koc noted. “This agility has enabled strategic deals across various sectors, positioning the region for continued growth.”

The surge in strategic deals, coupled with the diverging yet complementary approaches of Saudi and UAE sovereign funds, indicates a maturing market that has moved beyond opportunistic investments to become a sophisticated player in global M&A. As traditional markets grapple with regulatory challenges and higher interest rates, the Middle East’s emergence as a deal-making powerhouse appears set to continue into 2025.