As per the latest survey done by EY study, majority of the MENA firms felt utterly satisfied lot with their ongoing performance within the COVID-19 crisis framework.
For the subsequent three years down the time frame, a vast majority of business executives anticipate that Middle East will remain poignant as the most preferred Investment Destination.
As per the recent edition of the EY Global Capital Confidence Barometer (CCB), it stated that around 81 percent of the executives that were in surveillance in the MENA territory anticipated the territory to develop most growth as well as prospects for their firm within 2024.
Propelled by the Pandemic, almost majority of the executives directed a wide-ranging strategy and portfolio evaluation, and they plan to emphasis on investing in client-centric digital and technology competences, the poll also revealed.
Although 90 percent of MENA respondents stated out that they witnessed out a deterioration in revenue due to the Covid-19 pandemic, most establishments feel pleased with their performance during the turbulent times.
In addition, 71 percent of those surveyed stated out that they assume to witness profits return to pre-pandemic levels by 2022 or earlier, while 69 percent forestall a return to regularized profitability within the same timeframe.
According to the survey, mergers and acquisitions (M&A) will be the favored strategic option as establishments look to fast-track the propelling within the post-pandemic world, with 37 percent of MENA firms scheduling to actively acquire in the forthcoming twelve months.
Matthew Benson, EY MENA strategy and transactions leader, stated out that: “The reduced travel, social-distancing, remote-working, and low oil prices of the past year have had a disproportionate impact on corporate earnings. Yet MENA corporates remain nimble and resilient with executives finding that the current circumstances present a unique time for M&A, with several sectors ripe for consolidation.”
“In 2020, M&A activity was largely led by government related entities and the transformation of national oil companies Aramco and Adnoc, as well as the investment strategies of ADQ and PIF. This is in line with the general trend toward increase privatisation related to key infrastructure assets such as electricity, aviation, and housing. However, there is also a strong pipeline of interesting mid-market opportunities, largely driven by sellers’ needs to raise capital.”
The report found that 87 percent of MENA establishments are undertaking substantial business and technology revolutions to stay relevant and fast-track growth. The application of technology due to the impact of Covid-19 on workplace protocols has made MENA firms better productive, triggering the commencement of a widespread digital makeover across many sectors.
MENA respondents quoted a specific focus on fast-tracked digitization of client voyages and business developments as their most significant strategic action for evolution.
The top five investment destinations in the MENA region, including both native and cross-border M&A activities, are Saudi Arabia, the UAE, Kuwait, Oman and Egypt while the segments most likely to actively pursue acquisitions in the forthcoming 12 months are automotive and transportation (45 percent), advanced manufacturing (41 percent), financial services (39 percent), real estate and construction (36 percent), and oil and gas (28 percent).
To support their revolutions, 76 percent of MENA establishments strategy to upsurge investments in technology and digital, while 64 percent will emphasis more on innovation.
When requested about their primary strategic M&A activity, 84 percent of MENA respondents stated they plan to invest in bolt-on acquisitions – minor acquisitions in the same sector that will upsurge market share. In addition, 55 percent of those who plan to acquire are looking for assets domestically rather than globally.
Anil Menon, EY MENA M&A and equity capital markets leader, stated: “The vast majority of MENA respondents shared that the pandemic led to a reassessment of their M&A strategy and rebalancing of their portfolio. Moreover, when surveying a target for acquisition, companies are not only considering overall resilience, but digital strategy and technology alignment. Many corporations have accepted the pandemic fallout as an opportunity to grow market share and increase speed to market to meet the fluid and dynamic business environment.”
