The mergers & acquisitions (M&A) deals announced in the Mena region dropped by 40 per cent in value to $8.5 billion during the first quarter of 2012 from $14.1 billion last year, said a report.

The volume of announced M&A deals increased by 7 per cent, from 98 deals last year to 105 deals in the first quarter this year, according to Ernst & Young’s Mena mergers & acquisitions update.

The E&Y in its report said compared to the previous quarter which saw announced deals worth $7.2 billion, the total M&A deal value ($8.5 billion) in the first quarter of this year jumped by 18.1 per cent. However, the average announced deal size was $242.9 million, down 34.7 per cent from $372.1 million last year.

Phil Gandier, Mena head of transaction advisory services at E&Y said, “We are still seeing a level of caution in the regional markets. Overall, the positive news from the 2012 Q1 M&A numbers is that the start of this year has been better in comparison to the start of 2011.”

“A total of 19 sovereign wealth and private equity deals took place in Q1 2012, with 10 deals in the month of March alone. This could mean that private equity players, who are usually the first movers in M&A, are taking comfort from upward revisions of regional economic growth projections and are gaining in transaction confidence,” he stated.

According to Phil, the top 10 deals in Q1 were valued at $7.27 billion or 85.5 per cent of the total regional M&A deal value. Of these, five are outbound (regional business buying international assets), three are domestic (regional business buying regional assets) and two are inbound (international business buying regional assets), he noted.

The top two deals by value were both worth $2 billion and involved UAE sovereign wealth funds and private equity firms buying global assets, the E&Y report said.

These deals were Mubadala Development’s acquisition of Brazil’s Grupo EBX and Centurion Investment Company’s acquisition of India’s UAE Exchange & Financial Services.

The third spot went to France Telecom which bought a $973 million stake in Egyptian Company for Mobile Services. The fourth and fifth spots were occupied by Qatari investors buying UK and UAE assets, the report said.

These include the $525 million announced deal of Qatar Investment Authority buying One Cabot Square in the UK, and Mannai Corporation’s $445 million investment in Damas International respectively.

On the outbound deals, the E&Y said with a disclosed deal value of $5.5 billion, the deals made up 64.7 per cent of M&A transactions in Q1 2012.

“Regional investors continue to dominate the M&A market and continue on their path of large international investments for solid assets. This trend will continue going forward,” said Phil.

In terms of total domestic deal value in Q1 2012, the consumer products assets have replaced real estate as the most sought after sector in Mena region, valued at $572 million, said the E&Y in its update.

The real estate saw deals worth $562.1 million, followed by transportation and insurance deals worth $140 million and $125 million, respectively.

In terms of total volume of domestic deals, consumer products led with seven, followed by real estate, banking and capital markets, and diversified industrial products, all with six deals, the report added.-TradeArabia News Service