Middle Eastern state firms are becoming increasingly ambitious as they scour the globe for acquisitions, targeting everything from a top European plastics producer to major mining operations.
In just the last 24 hours, news of nearly $20 billion in potential deals has emerged. Abu Dhabi energy giant Adnoc made a preliminary approach for German chemical producer Covestro AG, Bloomberg News reported Tuesday, triggering a record jump in the stock. It’s considering an offer that could value the business at almost €11 billion ($12 billion) and rank as its biggest-ever overseas takeover.
Saudi Arabia’s sovereign fund is in advanced talks to buy a roughly $2.5 billion stake in Vale SA’s base metal unit, people with knowledge of the matter said. It’s part of a plan by the country to snap up minority stakes in a range of iron ore, copper, nickel and lithium assets globally.
Chinese electric vehicle brand Nio Inc. said Tuesday it’s sealed a $739 million investment from an arm of the Abu Dhabi government. Meanwhile, Abu Dhabi wealth fund ADQ made an aborted attempt in recent months to buy Lazard Ltd., according to people with knowledge of the matter.
Top Persian Gulf countries are keen to take advantage of the recent period of higher crude prices to acquire assets internationally and further diversify their economies. The spending spree has ranged from industrial and financial assets to natural resources and renewables to sports and entertainment.
“Deal activity has been fueled largely by sovereign wealth fund and government-related entity outbound investments and cross-border transactions,” said Zubair Mir, a Dubai-based partner at Norton Rose Fulbright.
“While investors proceed with caution, given the prediction of a global economic slowdown, we have seen cash-rich sovereigns and GREs take advantage of their liquidity and make targeted investments as the region looks to diversify its traditional oil-based economic,” he said.
AviLease, a jet lessor owned by Saudi Arabia’s Public Investment Fund, is also in advanced talks to acquire Standard Chartered Plc’s €3.5 billion aviation finance arm, Bloomberg News reported in early June.
Emirates Telecommunications Group Co. has built a big stake in Vodafone Group Plc in the hopes of cherrypicking some of the choice assets being sold by the UK carrier. Sovereign fund Mubadala Investment Co. agreed last month to take control of Fortress Investment Group.
Saudi Arabia’s PIF has bankrolled a number of companies and pushed them to pursue global acquisitions as it pushes deeper into sectors from aviation and tourism to sports and video games. Early this month, PIF’s golf-crazy chairman Yasir Al-Rumayyan announced a preliminary deal for a shock merger of PGA Tour and Saudi-backed LIV Golf.
“As we approach the end of the first half of 2023, M&A activity maintains an upward trajectory across the region,” Mir of Norton Rose said.
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