Qatar, whose spree of deals across Europe has made headlines in recent years, is also leading the charge in acquisitions in the Middle East, where it has completed the largest purchase of the year so far.
Government-backed Qatar Telecom's $2.2-billion (U.S.) purchase of the remaining 48 per cent of Wataniya Telecom that it did not own has helped lift inbound acquisitions in the Middle East to $19-billion so far this year, the highest year-to-date volume since 2007, according to Dealogic, the data provider.
While acquisition interest in the Middle East was dented by the financial crisis and then political unrest, Qatar has come to the fore, investing its gas dollars to take advantage of attractive buying opportunities. The number of acquisitions in the Middle East has increased but the volumes remain lower than the pre-crisis boom of 2006 and 2007, signalling a more fragmented – yet perhaps healthier – environment for regional deal making.
"Regional merger and acquisition activity has picked up this year," says Makram Azar, the global vice-chairman of investment banking at Barclays, which headed the Dealogic Middle East adviser rankings for acquisitions made into the region or made by Middle Eastern institutions so far this year.
For the first time in recent history, investments into the region were worth more than Middle East investments out of the region, reversing the long-standing trend that has seen outbound acquisitions by sovereign wealth funds dwarf inbound deals, according to Dealogic.
After the onset of the Arab spring, Gulf governments reprioritized spending plans to place a greater focus on investments at home, to try to placate their citizens. Qatar, with a population of fewer than 300,000 nationals, has had more leeway to continue its international purchases.
"All things considered, the region is still offering steady growth prospects driven by hydrocarbon, demographic and trade factors," says Ashok Aram, chief executive of Deutsche Bank for the Middle East and north Africa. "Many international players who remain underinvested in the region are looking to address the imbalance and we expect this trend to continue."
As deal making rejuvenates in the region, the size of transactions has generally shrunk, even as Qatar bucks the trend. Qatar Telecom's $2.2-billion purchase of Kuwait-based Wataniya was the largest Middle East telecoms deal since September 2009, in a sector that once dominated acquisition volumes.
Over the past year Qatar Holding, the direct investment arm of Qatar's sovereign wealth fund, has taken stakes in companies from oil producer Total to luxury jewellery retailer Tiffany in the U.S. and Xstrata, the mining company at the centre of a proposed controversial merger deal.
Barclays, which advised on Qatar Holding's acquisition of a 20-per-cent stake in BAA, the owner of Heathrow airport, leads regional advisory rankings with $4.7-billion, followed by Goldman Sachs at $3.7-billion and Credit Suisse at $3.5-billion, Dealogic data show. Qatar Holding owns stakes in both Barclays and Credit Suisse.
On a global scale, acquisitions in the Middle East only represent 3.8 per cent of all targeted acquisition volume in the Europe, Middle East and Africa region, and this year marks only the second time on record that targets in the Middle East exceeded those in Africa.