More GCC banking mergers, PE investment deals looming, says expert

The GCC area is predicted to see one other spherical of financial institution mergers within the coming months, at the same time as many personal fairness and enterprise capital funds eye distressed property, a high sector skilled has revealed.

Know-how, healthTech, eduTech and prescription drugs are among the many sectors that are anticipated to see big-time PE and VC fund investments within the short-to-medium time period, Amer Lakhani, government director and head of banking and monetary providers, EMA Companions, UAE, advised Arabian Enterprise in an unique interview.

The Gulf merger wave: What’s subsequent for the banks within the area?

Abu Dhabi’s three-way financial institution merger is ready to create a $114bn monetary large

“The consolidation pattern in banking, commenced a few years in the past, is ready to speed up within the coming months within the wake of quicker digitisation and branchless banking,” he mentioned.

“The intense erosion within the worth of financial institution property in a number of pandemic-hit industries comparable to tourism, hospitality, actual property and retail will add to the consolidation transfer,” Lakhani added.

Amer Lakhani, government director and head of banking and monetary providers, EMA Companions, UAE

Lakhani mentioned there are round 50 native and overseas banks working within the UAE alone and particular person banks might be pressured to shut extra branches going ahead, resulting in discount in workers in retail banking as additional digitisation is embraced.

“This might lead to additional M&A, notably amongst among the smaller banks,” he mentioned.

The GCC area has witnessed vital consolidation within the banking sector within the latest years, together with the merger of Nationwide Financial institution of Abu Dhabi and First Gulf Financial institution in 2017 to type UAE’s largest financial institution, First Abu Dhabi Financial institution, and the merger of ADCB, Union Nationwide Financial institution and Al Hilal Financial institution, and SABB and Alawwal Financial institution in Saudi Arabia.

On the funding entrance, Lakhani mentioned PE corporations are at present actively pursuing alternatives in sectors which they consider will climate the present storm and succeed within the long-term.

“Know-how ventures, particularly in healthcare and training segments, as additionally among the pharma firms are on their radar,” Lakhani mentioned, with out revealing the names of the businesses or PE funds that are at present concerned in negotiations.

Nationwide Financial institution of Abu Dhabi and First Gulf Financial institution in 2017 to type UAE’s largest financial institution, First Abu Dhabi Financial institution

“At first of the pandemic, PE corporations and buyers had been sitting on their palms. However for the previous couple of months, quite a lot of PE corporations are neatly and opportunistically taking a look at distressed property or actual property which were impacted by the pandemic,” Lakhani mentioned.

He famous that many firms in sectors which have seen and proceed to see scope for quick development and innovation are additionally looking for funding within the quick time period to assist gas additional development.

These sectors embrace life sciences, know-how, client items necessities, biotech, training know-how, chemical substances and e-commerce.

The merger of ADCB, Union Nationwide Financial institution and Al Hilal Financial institution in 2019

“The method (of finalisation of negotiations) is taking quite a bit longer particularly for increased worth tickets which require bodily diligence,” Lakhani mentioned, including that this was notably the case with abroad PE corporations due to flight and different restrictions brought on by coronavirus.

Mubadala, Beco Capital, Wamda Capital, Shorooq Companions, Hala Ventures, 500 Startups, ADQ, Phonecian Funds, Hambro Perks, Center East Enterprise Companions (MEVP), Saned Fairness Companions and Enterprise Souq are among the many main Center East-based funding funds.