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Environmental Considerations Motivate Increasing Number Of Middle East M&A Deals | |
| Sumita Pawar |
Following a vibrant 2022 that recorded a total deal value of USUS$23.8 billion, the Boston Consulting Group reported, that with ‘green’ M&A deals increasing from 5 percent in 2020 to 10.3 percent in 2021 suggesting that more dealmakers are recognising the value-creating potential of these transactions.
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Ihab Khalil, Managing Director, and Senior Partner, BCG said, “green deals are very hot in the region. Soaring sustainability transactions in the Middle East are a clear outcome of established national transformation programs seeking out diverse economic outputs for countries on their path to net zero,”.
He further added, “As the region continues grounding itself as a hub where collaboration and diversification can bear fruit, so will green mergers and acquisitions,”.
BCG’s analysis revealed a clear upward trend in green-related deals over the past decade, with the strongest acceleration occurring in 2021 when Middle East deal volumes nearly doubled to 10.3 per cent following two softer years for broader M&A activity and green transactions, mentioned the report.
Green M&A has been growing particularly quickly in industries that are at the forefront of the energy transition and in emerging markets, with the Middle East showing the highest level of green activity globally.
According to the report, over the past ten years, the energy and utilities industry had the highest share of green M&A and the largest increase, showing a 98 percent increase in deals from 2020-2021, contributing to 10 percent of M&A deals in the Middle East in 2021.
Asia-Pacific (especially China) was the second-most active region, with a green deal share of approximately 8 percent in 2021.
“Though the Middle East is seeking out net zero solutions to power its economy, it is not letting go of the stream of energy and power,” said Ronald Maalouf, Managing Director, and Partner, BCG.
Increasing ventures in hydrogen will surely position the region not only as a reliable sustainable centre of energy supply but as a leader in that segment capable of powering an even greater number of mergers and acquisitions across the board, he added.
BCG expects more attention to be drawn to the region’s green portfolio to forefront global sustainable development goals to success.
By Sumita Pawar