Mena’s private equity (PE) market is in danger of losing the deal momentum it has gradually built up in the last decade following the financial crisis, according to a report from Fitch Solutions.
“While the nascent PE market certainly has a future in the Mena region, we believe that 2019 will fail to provide much of a tailwind for its emergence on the global stage,” it states.
Data supplied by Zephyr to the end of October shows that the value of deals ($2.4 billion) is only slightly higher than the 2017 figure ($2.38 billion) while the volume of deals is down from 86 in 2017 to 80 this year.
Furthermore, the final value of deals for 2017 more than doubled in the final quarter ($5.97 billion across 107 transactions) meaning that there will need to a similar rush of activity if 2018 is not to be recorded as the slowest year for deals since 2014.
The report’s authors attribute the slump to an underperforming macroeconomic backdrop, jitters in the oil market stemming from equities market volatility and rising political risk in the region.
Amid the bearish forecast, the report does also highlight one area of projected growth for Mena’s PE firms. According Mena Research Partners, private-funding investments in GCC fintech start-ups is expected to reach $2 billion in the next decade – a sizeable increase from the $105 million invested in the previous decade, half of which was invested in 2017 alone.
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