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November 17, 2015 | 17:45 | Dubai
There is compelling evidence for a revival in the M&A deal pipeline in MENA region in 2016. Although deal pipeline optimism has not returned to last year’s levels, 71% of MENA respondents expect their deal pipelines to increase, up from 56% six months ago. The most marked improvement came in the UAE, where 70% of Emirates-based respondents see their deal pipeline improving, a staggering increase from 14% in April 2015, according to the latest Global Capital Confidence Barometer released by EY. The Global Capital Confidence Barometer gauges corporate confidence in the economic outlook and identifies boardroom trends and practices. It is a regular survey of senior executives from large companies around the world.
Overall, MENA companies’ appetite for M&A continues to be strong, the survey finds. Dealmaking sentiments have improved compared with six months ago. At the same time, optimism about the MENA economy’s prospects appears to have firmed since April 2015, although falling short of the levels a year ago. The survey also finds that 18% of MENA respondents believe that the regional economy is on a strong recovery path, up from the 6% who believed so in April 2015. Cost cutting and operational efficiency remain top of mind for 45% of MENA executives in the next 12 months, compared to 56% of global respondents. Growth continues to be the next best business objective, identified by a still healthy 35%, although at a diminished scale compared with a year ago. In a sign of the difficult circumstances facing some MENA corporates, 4% identified survival as their organization’s main focus over the next 12 months. Six months ago, only 1% viewed survival in such terms.
By contrast, UAE companies’ focus on growth has returned, with 45% setting strategies keeping growth in mind, compared with 39% in April 2015. A plausible explanation for stronger sentiment for corporate growth is a sense that governments are being forced to involve the private sector as state budgets come under pressure.