How Increased Mergers and Acquisitions Are Shaping the Saudi Economy in 2024
In recent years, Saudi Arabia has experienced a remarkable surge in mergers and acquisitions (M&A), reflecting a concerted effort to fortify its competitive business landscape. In 2024 alone, the General Authority for Competition (GAC) approved a record 202 economic concentration requests, a 17.4 percent increase from the previous year. This Increased M&A Activity is a testament to the Kingdom’s strategic initiatives aimed at enhancing market performance, boosting consumer and business confidence, and attracting foreign investment.
The rise in M&A approvals comes at a time when global deal volumes have declined, underscoring Saudi Arabia’s unique position in the market. While the Middle East and Africa region saw a modest 5 percent decline in deal volume, Saudi Arabia’s M&A market continued to thrive, driven by robust economic policies and a favorable regulatory environment.
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Economic Diversification and Sectoral Growth
The manufacturing sector has been a significant driver of M&A activity, accounting for 67 of the approved requests. This sector’s dynamism is further highlighted by the substantial interest from foreign companies, which filed 28 percent of their concentration requests in manufacturing. Additionally, the information and communications sector, with 39 approved requests, and the wholesale and retail trade sector, along with motor vehicle and motorcycle repairs, with 22 requests, showcase the diverse market activity.
Emerging sectors such as off-road tires, nicotine replacement therapy manufacturing, and industrial protective coatings have also gained traction, reflecting the Kingdom’s commitment to sectoral growth and economic diversification. This diversity aligns with Vision 2030, which aims to create a business-friendly environment that fosters innovation and supports sustainable development.
The Role of Saudi Tadawul Group
The Saudi Tadawul Group, the owner of the Saudi stock exchange, has been pivotal in bolstering the local capital market through strategic M&A activities. The group’s recent acquisition of Saudi-based Direct Financial Network is a testament to its commitment to developing the data and analytics space. According to Lee Hodgkinson, Tadawul’s chief strategy officer, M&As are expected to play a more significant role in the group’s future endeavors.
Tadawul’s efforts to enhance market liquidity, particularly in fixed-income trading, and its initiatives to ease access for foreign investors, have significantly contributed to increased M&A activity. Exchange-traded funds (ETFs) tracking shares of Saudi Arabian companies have garnered substantial interest, with investors from China showing keen interest. The Kingdom’s equities market has seen a surge in activity, with total average daily traded value rising to about $2 billion in 2024, driven by a broader mix of initial public offerings (IPOs).
A Bright Future for Saudi M&A
As Saudi Arabia continues to strengthen its regulatory and economic frameworks, the surge in M&A approvals reflects its ambition to establish itself as a regional hub for business and investment. The GAC’s efforts to combat illegal monopolistic practices and implement competition-enhancing policies have been instrumental in creating a competitive and attractive market.
With Vision 2030 as its guiding framework, Saudi Arabia is well-positioned to capitalize on increased M&A activity to drive economic growth, attract foreign investment, and promote sustainable development. As the Kingdom continues to evolve and diversify its economy, the future of Saudi M&A looks exceptionally promising.
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