Arab News, Monday, Dec 28, 2020 | Jamadi Al Awwal 13, 1442
M&As poised to continue growth in 2021 as optimism returns to Saudi market: JP Morgan
Saudi Arabia: Despite the COVID-19 crisis creating business
uncertainty across the Middle East and North Africa (MENA) region, including
Saudi Arabia, 2020 has still been an eventful year for mergers & acquisitions
(M&As) market, according to Bader Alamoudi, senior country officer for JP Morgan
– Saudi Arabia.
In 2020, M&A activity was driven by companies looking to streamline costs and
boost efficiency and optimization, particularly during periods of prolonged
uncertainty, Alamoudi told Argaam in an interview.
“As in previous years, the financial sector has been one of the most active in
terms of M&A activity in the region during 2020. The consolidation theme has
created a ripple effect on other sectors, including energy, real estate etc.,
where we have started to witness heightened activity. I believe such activity
will continue next year as well,” he said.
Alamoudi believes high-quality assets that are less cyclical in nature, such as
infrastructure-type, will continue to attract interest from local and
international investors.
“Several M&A discussions during the pre-summer period were put on-hold, however,
the momentum has considerably picked up and a lot of new opportunities are
currently being explored,” Alamoudi noted.
In 2020, issuances in regional debt capital market (DCM) were more agile, with
the respective governments doing an outstanding job in laying the ground for
other government related entities (GREs) and corporate institutions entering the
market, he pointed out.
Saudi Arabia’s Public Investment Fund (PIF) in May said it bought stakes in
companies including BP Plc, Boeing Co., Facebook Inc. and Walt Disney Co. during
the pandemic. It also invested in India’s Reliance Retail Ventures Ltd. and Jio
Platforms, and three sector-specific exchange traded funds (ETFs).
“Regional sovereign issuers were the first movers to tap in DCM during the
pandemic, which made it easier for others to follow. The institutions took
advantage of ample liquidity within the overall system,” Alamoudi said.
Plans for 2021
In Saudi Arabia, the US investment bank advised National Commercial Bank (NCB)
on its $15.6 billion acquisition of Samba Financial Group. Previously, the
lender also advised on the mammoth initial public offering (IPO) of oil giant
Saudi Aramco.
JP Morgan will continue to expand its presence in the Kingdom by introducing new
products and hiring more people, Alamoudi said. “Today, we operate in all lines
of business in the Kingdom, with 85 percent Saudization rate and 33 percent
female employees,” he added.
“We continued our hiring spree in Saudi Arabia during the pandemic as well,”
Alamoudi further stated.
The stimulus packages announced by the Saudi Central Bank (SAMA) proved to be an
immense source of cash flow, as it helped ease up the payment burden on firms.
Alamoudi expects the improvement in oil prices to re-kindle retail confidence
and fuel bigger investment banking activities next year.
“2021 is going to be a very interesting year with lots happening across all
lines of business. Consolidation in many sectors will continue, with a strong
pipeline in DCM and equity capital market (ECM),” he concluded.