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2022 to be a bumper year for cross-border M&A, says Lumina Capital Advisers

Lumina Capital Advisers has recently launched its 2022 cross-border insights report assessing the factors that are contributing to the growth in cross-border transaction activity between the UK and the Middle East.

The report notes the growth in UK-to-Middle East and North Africa (MENA) cross-border trade and deal activity between 2018- 2020, fuelled by Brexit, revenue diversification opportunities and the spotlight on MENA non-oil sectors and predicts 2022 to be a record year for cross-border M&A.
UK businesses have been expanding their operations across the Middle East as a result of Brexit-fuelled global geographic expansion. Since 2018, the Middle East’s contribution to overall revenue has increased by 1 per cent Y-o-Y. In 2020, the MENA region generated 14 per cent of revenue for FTSE listed companies, compared to 13 per cent in 2019 and 12 per cent in 2018. Lumina Capital Advisors anticipates that this Y-o-Y growth will continue in 2022, with the percentage of MENA revenues generated by FTSE listed companies exceeding 15 per cent by year end.
While UK companies already established in the region are growing their operations, Lumina also sees new companies eyeing up the MENA opportunity and expanding to the region for the first time. The number of FTSE listed companies with operations in the MENA increased from 22 to 25 between 2018 and 2020. As the Middle East continues its move away from oil, improving business entry and environments and focusing on sustainability and ESG commitments, the MENA region has become an attractive opportunity for businesses to diversify their revenues in a relatively higher growth market.
While there are multiple examples of capital flowing from the UK into the GCC, capital is also moving back the other way, with a number of high- profile investments being announced in recent months. Mubadala’s GBP10 billionn commitment into UK clean energy and tech sectors and SABIC’s Teeside investment provide recent examples of the GCC’s push into ESG. PIF’s investment in Newcastle Football Club is seen as an opportunity to both raise the profile of the region and bring ties closer with the UK.

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