Hogan Lovells Publications | 28 February 2018

Investment outlook 2018: Transaction and deal trends in the GCC

Gulf economies and markets have transformed in many ways in response to three years of low oil prices, new regional leadership and a global world order in flux. The tougher fiscal environment and renewed drive to implement diversification are reshaping the region’s investment landscape – and acting as a catalyst for a more active M&A market, led by privatisation in Saudi Arabia, banking consolidation and the emergence of a dynamic technology sector in Dubai.

Key developments which we expect to see in 2018 include:

• More clarity around the listing of a small share in Saudi Aramco scheduled for the second half of 2018, plus a couple of other larger Saudi privatisations, perhaps Saudi Electricity or the Tadawul itself.
• A decision to incorporate Saudi Arabia into the MSCI Emerging Market index, signalling the maturing of the Tadawul ahead of a wave of Initial Public Offerings (IPOs).
• Sizable private IPOs, such as UAE headquartered GEMS Education proposed London listing and ACWA Power in Saudi, with the total value of new listings potentially setting a record even without Aramco.
• A pick up in M&A activity due to continued consolidation in the banking sector and a vibrant tech sector.
• More activity from sovereign wealth funds as they restructure their portfolios and invest inflows from privatisation.
• Progress in extending the public private partnership (PPP) model, after numerous false starts.

This report explores the market dynamics that will shape the outlook for GCC transactions in 2018 and provides new insights into the longer-term shifts emerging as the world changes.

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