The overall softening of the market has heighted the overall transactional volume of mergers and acquisitions, as cash rich conglomerates procure tech-based companies at rebased prices, said a report.
Lumina Private Company Index (LPCI) Q2 2022 reflects a significant repricing of deal valuations and cross-border opportunities.
New sectors such as the meta-space are expected to emerge in the months ahead even as Sovereign Wealth Funds are seeking to capitalise on outbound opportunities into UK and Europe.
Emergence of secondaries
The emergence of secondaries VC (venture capital) funds in the region is also a trend to watch said Lumina, the leading corporate finance advisory firm connecting capital and transactions across the Middle East and the UK, which has published its latest quarterly report. The first private company M&A index covering the GCC, the Index tracks private company M&A transaction multiples across a broad range of sectors in the GCC, together with publicly available information in the market.
The Index reports that during Q2, average EBITDA/EV multiple value decreased to 6.2x, reflecting a significant repricing of deal valuations, driven by increased risk associated with global economic slowdowns, inflation and refinancing risk.
Within this context, Lumina has noted how future-focused sub sectors such as FinTech, Ed-Tech and Med-Tech are performing the strongest.
Emergence of metaverse
New sectors are also emerging, including the metaverse, which is expected to be a precursor to future expansion in the meta-space. Lumina is currently advising on the region’s first deal involving a leading global Metaverse creator.
The high oil price, strong dollar and rising cost of capital in the UK has led to robust investment commitments by the UAE and Saudi Arabia to the UK and Europe, driven largely in the Biotech, Clean Energy development and sustainable infrastructure sectors.
George Traub, Managing Partner at Lumina comments: “Although the LPCI analyses private transactions across all sectors, we predict a record year moving forward for mid-market deal activity across our key regions. We have seen many regional Sovereign Wealth Funds capitalise on outward opportunities into the UK and Europe.”
He continues: “We are also seeing the emergence of secondaries VC funds as an ongoing trend to watch, looking to capitalise on those seeking liquidity and the significant repricing in valuations. Rising inflation and increased cost of capital, when coupled with uncertainty over valuations, has led to a de-risking of investment structures, with a return to more structured exits.”-- TradeArabia News Service
&uuid=(email))