Mergers and acquisitions in the Middle East rose 19% in the first half of 2025, reaching 271 deals compared with 228 in the same period last year, according to PwC’s TransAct Middle East mid-year update. The rise contrasts with a 9% drop in global M&A activity during the same period, underscoring the region’s divergence from broader international trends.
The report attributes the increase to the role of sovereign wealth funds, state-linked corporates and domestic investors who are executing mid-sized transactions aligned with national priorities. These include localisation strategies, investment in digital infrastructure and economic diversification targets under programmes such as Saudi Arabia’s Vision 2030 and the UAE’s economic transformation plans.
The UAE, Saudi Arabia and Egypt accounted for 89% of all deals across the region. Intra-regional transactions also increased, with 134 deals recorded in the first half, signalling deeper Gulf integration and a stronger flow of capital between regional markets. PwC said these transactions are more straightforward to finance, faster to complete and directly tied to government objectives, which has provided momentum despite a weaker global backdrop.
Romil Radia, Deals Markets Leader at PwC Middle East, said the growth reflects a shift towards mid-market, strategic assets that are easier to fund and deliver direct impact in areas such as green infrastructure, digital capability and healthcare services. He added that while global dealmaking has been held back by slower growth and trade-linked challenges, Middle East investors are focusing on targeted acquisitions that support long-term policy objectives.
Key sectors
Technology, energy transition and healthcare have been the main sectors driving deal activity. G42’s $2.2 billion acquisition of a 40% stake in Khazna Data Centres highlighted investor interest in digital infrastructure. Saudi Arabia’s announcement of Project Transcendence, a $100 billion commitment to artificial intelligence, underscored the government’s push to expand advanced technology capabilities and diversify away from hydrocarbons. Consolidation in healthcare has also been a notable theme, as regional operators seek scale and improved efficiency.
Sovereign wealth funds remain central to the M&A landscape. Mubadala Investment Company completed 52 transactions in 2024 worth $29.2 billion across technology, logistics and telecom. The Public Investment Fund in Saudi Arabia has continued to support non-oil projects and diversify holdings, with several transactions announced in the transport, energy and financial services sectors during the first half of this year. Egypt has also accelerated privatisation and asset sales, contributing to regional activity despite domestic fiscal challenges.
PwC’s report places the Middle East in contrast with other emerging markets, where deal activity has slowed under the pressure of higher interest rates and trade disruptions. Southeast Asia recorded a decline in both volume and value of deals, while China’s outbound investment has remained subdued amid regulatory and geopolitical headwinds. The Middle East has avoided these pressures by leaning on sovereign capital and regional buyers rather than relying on cross-border flows from Europe or North America.
The report notes that domestic and intra-regional transactions are likely to continue dominating activity, with mid-sized deals seen as the most practical route to expansion in sectors such as renewable energy, healthcare and digital platforms. PwC said this approach allows for steady deployment of capital while advancing state-backed reform agendas.
Looking ahead, PwC expects the pipeline to remain healthy into the second half of 2025, supported by sovereign-led investments in hydrogen, transport and renewable projects. IPO activity is also expected to complement the M&A market. In 2024, the Gulf Cooperation Council recorded 53 listings raising $13.2 billion, with Saudi Arabia and the UAE accounting for the majority. Market participants expect a steady flow of new listings this year, which could provide additional exit opportunities for private equity and strategic investors.
Despite global headwinds, the Middle East continues to show capacity for growth in dealmaking. PwC said that with sovereign funds active and corporates aligning acquisitions to reform agendas, the region remains positioned to unlock value, reshape industries and build influence across high-growth markets.
