How FDI in GCC countries enable M&A activities

How FDI in GCC countries enable M&A activities

Blog Article

International businesses attempting to enter GCC markets can overcome regional challenges through M&A transactions.

In recently published study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more inclined to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western companies. For instance, large Arab financial institutions secured acquisitions during the 2008 crises. Additionally, the analysis suggests that state-owned enterprises are less likely than non-SOEs to make acquisitions during times of high economic policy uncertainty. The the findings suggest that SOEs are far more prudent regarding acquisitions in comparison with their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to preserve national interest and mitigate potential financial uncertainty. Furthermore, acquisitions during periods of high economic policy uncertainty are associated with a rise in investors' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by capturing undervalued target businesses.

Strategic mergers and acquisitions have emerged as a way to overcome hurdles worldwide businesses encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and grow their presence into the GCC countries face various difficulties, such as for instance cultural differences, unfamiliar regulatory frameworks, and market competition. But, once they acquire regional companies or merge with regional enterprises, they gain instant use of local knowledge and study their local partners. One of the most prominent cases of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce company recognised as a strong rival. Nonetheless, the acquisition not merely removed regional competition but in addition offered valuable regional insights, a customer base, and an already founded convenient infrastructure. Moreover, another notable instance may be the purchase of a Arab super application, particularly a ridesharing company, by the international ride-hailing services provider. The multinational firm obtained a well-established manufacturer having a big user base and substantial knowledge of the area transportation market and client preferences through the acquisition.

GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a way to consolidate industries and develop local businesses to be effective at competing on a worldwide scale, as would Amin Nasser likely let you know. The necessity for economic diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working seriously to attract FDI by developing a favourable ecosystem and increasing the ease of doing business for foreign investors. This plan is not only directed to attract foreign investors simply because they will add to economic growth but, more critically, to enable M&A deals, which in turn will play a significant part in enabling GCC-based companies to achieve access to international markets and transfer technology and expertise.