The Middle East and North Africa or Mena region witnessed a total of 522 merger and acquisition (M&A) deals valued at $71bn in the first nine months (9M) of 2024 and is expected to close the year with more than 700 deals, close to five-year high of 750 deals, according to EY.

The deal volume this year grew by 9%, while deal value saw a 7% rise on an annualised basis, EY said in its latest report.

"The Mena M&A market is extremely buoyant and we expect to end the year with more than 700 deals, which will be very close to the historic five-year high of 750 deals. This is a remarkable achievement in the context of uncertain geopolitics and higher cost of capital," said Anil Menon, EY Mena Head of M&A and Equity Capital Markets Leader.

Cross-border M&As played a significant role, contributing 52% of the overall volume and 73% of the value in 9M-2024, it said, adding meanwhile, domestic M&A value increased year-on-year (y-o-y) by 44% to $19.3bn, primarily driven by government-related entities transactions in the oil and gas, metals and mining and chemicals sectors. Domestic M&A activity accounted for 48% of the total number of deals.

The US remained the preferred target destination for Mena investors with 32 deals amounting to $18.3bn. With the US-UAE Business Council playing an active role in promoting partnerships, prominent US companies are collaborating with the UAE public and private sector stakeholders on various initiatives.

The UAE and Saudi Arabia were the preferred destinations for investors due to their favourable business policies, with 239 deals with a combined value of $24.5bn. They were also among the top Mena bidder countries in terms of deal volume and value, representing 52% and 81% of the total respectively.

Sovereign wealth funds (SWFs), such as Abu Dhabi Investment Authority (ADIA) and Mubadala from the UAE and the Public Investment Fund (PIF) from Saudi Arabia, continued to lead the deal activity in the region to support their countries’ economic strategies.

"Deal activity in the Mena region has seen a notable improvement this year, driven by strategic policy shifts, the liberalisation of investment regulations and robust capital inflows from investors. With companies actively seeking opportunities to grow and diversify their operations, we have observed a surge in cross-border M&A volume and value," said Brad Watson, EY Mena Strategy and Transactions Leader.

Ten of the Mena region’s highest-valued M&As during 9M-2024 were concentrated in the GCC, it said, adding insurance and oil and gas were the most attractive sectors for investors in the review period, representing 34% of total deal value.

With Mena emerging as one of the most attractive destinations for foreign direct investment, inbound deals rose by 20% y-o-y in volume. Meanwhile, deal value surged by 47% y-o-y during 9M-2024. The first three quarters of 2024 saw 127 inbound deals valued at $10.4bn.

The US and the UK together accounted for 42% of total inbound M&A activity. The technology and professional firms and services sectors reported the highest deal volume and value, contributing 48% and 39% respectively.

The US contributed 33% of the total deal volume in these sectors, with 80% of these deals being partnerships with the UAE.