Saudi, UAE to lead IPO, M&A deals in region: JPMorgan

Initial public offerings (IPOs) and merger and acquisitions (M&As) will drive Middle East deals this year, led by Saudi Arabia and the UAE, Bloomberg reported, citing Sjoerd Leenart, global and regional head of corporate banking at JPMorgan Chase.

Private sector mergers and privatisation plans by the governments will accelerate, while corporate bond sales are also likely to increase, he told the news agency.

“There is a great need for companies to become more efficient, so we will see consolidation as one of the themes driving M&A,” Leenart added.

However, while signs are promising, mergers in the region “can be difficult to close and take a long time,” he said.

In Saudi Arabia, Saudi British Bank and Alawwal Bank started merger talks last April but are yet to complete a deal. Saudi listed hospital operators Al Hammadi Company for Development & Investment and National Medical Care Co. also began preliminary discussions in August but have not finalized an agreement so far.

Meanwhile, levels of activity will pick up in the region’s stock markets, particularly in Saudi Arabia and the UAE, Leenart said.

“Across our teams we are absolutely very busy at the moment with a lot of deals being worked on,” he added.

Saudi Aramco’s upcoming IPO, Tadawul’s potential inclusion on emerging market indices by FTSE Russell and MSCI, and the Kingdom’s rapid reforms are among the several actors likely to push TASI higher this year to a new high of 8,100, Argaam reported on Sunday.

Earlier this month, JPMorgan announced plans to hire staff and offer new services in Saudi Arabia ahead of the Kingdom's proposed inclusion in the two emerging market indexes.